TMI Blog2012 (5) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 9-5-2012 - VIJAY PAL RAO, RAJENDRA, JJ. ORDER 1. These appeals by the assessee are directed against the composite order dated 14.1.2010 of CWT(A) for the AYs 1996-97, 97-98 and 98-99 respectively. 2 . Since the grounds taken in all the AYs are common; therefore, for the sake of convenience, the ground taken for the AY 1996-97 are reproduced hereunder: (1) The Commissioner of Wealth Tax (Appeals)- 17, Mumbai (herein after referred to as CWT (A)) erred in confirming that the property (i.e land) is liable to wealth tax for A.Y. 1996-97. (2) ( a ) The CWT(A) erred in confirming the value of the property (i.e land) at Rs. 3,76,69,525/- for A.Y. 1996-97. ( b ) The CWT (A) erred in not adopting the Value of the Property at Rs. 56,45,721/- as per valuation Report dt 22.3.2004 of M/s. Shah Shah, Valued by the Government Approved Valuer. ( c ) The CWT (A) erred in not considering the deduction aggregating to Rs. 3,20,23,804/- as per valuation report dt 22.3.2004 of M/s Shah Shah, the break up of which are as under: ( i ) Largeness Factor (40%) 1,50,67,810 ( ii ) Cost of Development work of garden area 1,10,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see argued before the lower authorities that the market value of the property on the date of valuation for the purpose of determining the net wealth should be taken at Rs. 56,45,721/- after deducting 40% of the cost becauseof larger size of the land and further reducing the cost of development of garden area, construction of strom water drain, approach road and compound wall in garden area and 10% deduction on account of deferred value for 5 years as per the valuation report filed by the assessee. 4.1 The Assessing Officer assessed the wealth tax as per the valuation fixed by the Stamp Duty Authorities without allowing any deduction as claimed by the assessee. 5. On appeal, the CWT has confirmed the disallowance of deduction made by the Assessing Officer; however, directed the Assessing Officer to adopt the valuation of the property at Rs. 3,76,69,528/- for the AY 1996-97 which has also been given in the valuation report and with 5% incremental increase for the Assessment Year 1997-98 and 1998-99. 6. Before us, the ld. Authorised Representative of the assessee has submitted that the land in question is an Urban land but falling in the non-development zone and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for industry purpose for a period of 2 years from the date of acquisition cannot be included. In support of his contention, the ld. Authorised Representative has referred the budget speak of the Finance Minister on the Financial Bill 1992. He has also referred the definition of Industry concern as provided under section 3(c) (iv) of Industrial Development Bank of India Act 1964 and submitted that the hotel is considered as Industrial concern under the said Act. 6.2 Alternatively, the ld. Authorised Representative has submitted that the valuation of the land in question should be taken as per the valuation report dt 22.3.2004 after allowing deduction of 40% on account of larger size of the land in question. In support of his contention, the ld. Authorised Representative has relied upon the decision of the Hon'ble Supreme Court in the case of K Vasundara Devi v. Revenue Divisional Officer (LAO) in 1995 AIR 2481 and submitted that in the similar circumstances when the issue came up before the Hon'ble Supreme Court for determining the market value for compensation against the acquisition of the land, the Hon'ble Supreme Court upheld the view of the Hon'ble High Court for deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Planning Authority:"_ Provided .. 7.1 If any area notified as un-developed area or designated as a site for new town, the change of land used or any development of land is not permitted without any permission in writing of the Planning Authorities. 7.2 Vide notification dated 12.11.1992 under the MRPA 1966, the land in question was reserved to the extent of 50% for park and the remaining 50% of the land to be deleted and included in C-I zone for specific purpose of development of hotel subject to the conditions that the parties should develop and maintain the park and shall keep them for general public during restricted hours. 7.3 Thus, vide the said notification, 50% land was kept as reserved for park to be developed and maintained by the assessee and subject to the said conditions, the remaining 50% of the land was deleted from the reserved category and allowed to be developed for hotel. It is to be noted that the assessee acquired the land in question vide order of the Company Law Board dated 30.1.1995 which means that the assessee acquired the land in question after the notification dated 30.11.1992 and therefore, the prohibition against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( iii ) jewellery, bullion, furniture, utensils or any other article made wholly or partly of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals : Provided that where any of the said assets is used by the assessee as stock-in-trade, such asset shall be deemed as excluded from the assets specified in this sub-clause; ( iv ) yachts, boats and aircrafts (other than those used by the assessee for commercial purposes); ( v ) urban land; ( vi ) cash in hand, in excess of fifty thousand rupees, of individuals and Hindu undivided families and in the case of other persons any amount not recorded in the books of account. Explanation 21 [1]. For the purposes of this clause, ( a ) "jewellery" includes ( i ) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stones, and whether or not worked or sewn into any wearing apparel; ( ii ) precious or semi-precious stones, whether or not set in any furniture, utensils or other article or worked or sewn into any wearing apparel; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of prohibition of development and construction of the land, rather the notification permits the development of the land subject to fulfilment of certain conditions as prescribed in the notification. Therefore, in our opinion, the said notification, which permits the development of the land subject to certain conditions, it would not render the land in question under the exception as enumerated under clause (b) of Explanation 1 of sec. 2(ea) of the W T Act. Accordingly, we do not find any merit in the contentions of the Id AR of the assessee. 8. The second contention of the Id AR of the assessee is that the assessee acquired this land for specific purpose of development of hotel, which is for industrial purpose; therefore, the same is not assessable to wealth tax for the first two years from the date of acquisition as per the second exception provided in clause (b) of Explanation 1. 8.1 We find that the notification has permitted the development of the land only for hotel; therefore, after the said notification, the land in question cannot be developed other than hotel and there is no dispute on this point that the land was finally developed by constructing the hotel by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court in Administrator General of West Bengal v. Collector. Varanasi . [AIR 1988 SC 943], has applied the twin tests and held that 50% of the deduction should I be made when the sale transaction relate to smaller extent of the lands were found to be genuine and relied on to determine the market value of a large track of land and and 50% deduction was found to be reasonable in that case. The State did not file appeal against enhanced compensation or deduction. In Bhagwathula Samanna and Others v. Special Tahsildar and Land Acquisition Officer, Vishakapatnam Municipality , [AIR 1992 SC 2298], this Court had held that since lands are in developed area, no deduction towards developmental charges be made. In Vijay Kumar Motil Lal's and Mangal Gauri cases [ supra ], the only question was regarding deduction for developmental charges. Sales relating to smaller pieces of land when found to be germane Gujarat High Court deducted 60% of the value, this Court in M/s. Hasanali Khanbhai Sons Ors. v. State of Gujarat [C.A. No. 3263/79] dated July 26, 1995, upheld the deduction of 60% by the High Court. When genuine and reliable sale deeds of small extents were considered to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removing all the defects/hurdles attached to the property in question prior to its development; therefore, the expenditure incurred by the assessee for removing of the infirmity/defects, This expenditure incurred by the assessee in developing the public park as a pre-condition is to clear the way for development of land. Further the valuation date of the land in question is prior to development of the hotel at the land in question. Accordingly, the expenditure, which is incurred for exploiting the potential development of the land, is an allowable deduction for computation of fair market value while determining the net wealth. Accordingly, we allow the expenditure incurred by the assessee on development of park including construction of park, construction of strom water drain, compound wall in the garden area etc. 11. As regards the deduction on account of deferment value, nothing has been argued and no material has been brought to substantiate this claim of the assessee; therefore, we do not find any basis for the said claim of the assessee and accordingly, the same is rejected. 12. In the result, the appeals filed by the assessee are partly allowed. - - TaxTMI - TMITa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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