1997 (6) TMI 358 - AT - Income Tax

Summary

Issues Involved:
1. Valuation of Chunabhatti & Chembur properties.
2. Valuation of land at Baroda.
3. Inclusion of Patel House in the assessee's wealth.
4. Valuation of Patel House.
5. Inclusion of Bella Vista in the assessee's wealth.
6. Valuation of Bella Vista.
7. Treatment of liabilities claimed by the assessee.

Detailed Analysis:

1. Valuation of Chunabhatti & Chembur Properties:
The first ground concerning the valuation of Chunabhatti & Chembur properties, valued at Rs. 20,30,000, was withdrawn by the assessee's counsel on 11-11-1996.

2. Valuation of Land at Baroda:
Similarly, the fourth ground regarding the valuation of land at Baroda, fixed at Rs. 1,26,750 by the lower authorities, was also withdrawn on 11-11-1996.

3. Inclusion of Patel House in the Assessee's Wealth:
The assessee contended that Patel House should not be considered part of its wealth as it is a leasehold property. The Tribunal examined the lease deed and determined that the leasehold interest of the assessee in Patel House should be considered as part of its wealth under section 40 of the Finance Act, 1983. The Tribunal emphasized that the leasehold interest, even if not absolute ownership, constitutes an asset belonging to the assessee.

4. Valuation of Patel House:
The valuation of Patel House at Rs. 1,75,00,000 was confirmed by the Tribunal based on the earlier orders of the Tribunal for the assessment years 1984-85 to 1986-87. The assessee did not produce the lease deed or any arguments to challenge the valuation. The Tribunal drew an adverse inference against the assessee for not producing the lease deed and confirmed the valuation as determined by the lower authorities.

5. Inclusion of Bella Vista in the Assessee's Wealth:
The primary issue was whether Bella Vista, a leasehold property, should be included in the assessee's wealth. The Tribunal examined the lease deed, which was for 98 years, renewable for another 98 years. The Tribunal concluded that the leasehold interest of the assessee in Bella Vista constitutes an asset belonging to the assessee under section 40 of the Finance Act, 1983. The Tribunal rejected the argument that section 40 is a self-contained code and held that it should be read in conjunction with the Wealth-tax Act.

6. Valuation of Bella Vista:
The valuation of Bella Vista at Rs. 22,74,37,800 was confirmed by the Tribunal. The Tribunal emphasized that the leasehold interest, even if not absolute ownership, constitutes an asset belonging to the assessee. The Tribunal also referred to the decision in Plasticotes Investments Ltd., which supported the inclusion of leasehold interests in the net wealth of the assessee.

7. Treatment of Liabilities Claimed by the Assessee:
The assessee claimed various liabilities, including amounts payable to Shri S.P. Seth, Bombay Builders Co. Pvt. Ltd., and IDBI. The Tribunal noted that the Assessing Officer had disallowed certain liabilities based on the balance-sheet entries. The CWT(Appeals) remanded the matter to the Assessing Officer for verification of the liabilities. The Tribunal found the directions of the CWT(Appeals) to be just and reasonable and confirmed the order.

Conclusion:
The appeal of the assessee was dismissed, and the Tribunal confirmed the inclusion and valuation of Patel House and Bella Vista in the assessee's wealth. The Tribunal also upheld the directions of the CWT(Appeals) regarding the verification and treatment of liabilities claimed by the assessee.