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TMI Blog2012 (7) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CWT (A) has grievously erred in law and/or in failing to consider that the residential bungalow was exempt u/s. 5(vi) of the Act." 2.1 Since the facts and issues involved are identical for all the 4 assessment years and the appeals have been heard together, these are being disposed off by a single consolidated order for the sake of convenience. 3. The appellant is an Individual and assessed to tax regularly in respect of salary income and income from other source. In this case, on verification of income tax records, it was noticed by the Wealth tax Officer ( WTO) that the assessee had urban land. In the statement of Long term capital gain in the Income tax return, the assessee had shown land and incomplete construction thereon at Bodakdev, Ahmedabad as per the details given below:- Purchase date 30-9-1994: Acquisition cost. Rs. 18,85,700 Improvement cost 1994-95. Rs. 5,90,180 -do- 1995-96 Rs. 45,56,160 Rs. 70,32,040 Sale price as on 14-10-2002 Rs. 1,61,00,000 4 Since the assessee did not file the return of wealth, assessment was reopened by issue of notice u/s.17 of the Wealth-tax Act,1957. In response to the notice, the assessee filed return of net w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the construction of project in question has been carried out during the period 8-9-1994 to 31-12-1995; incurring total cost of Rs.70.32 lacs Further, the perusal of expenses clearly reveals the fact that the purpose remains unexplained for which the same have been incurred as there is no narration on them. Similarly, the five purchase deeds also do not establish anything as there is also no narration on them. But the examination of accounts establishes the fact beyond any doubt that the lands in question have been purchased from five independent sellers. Further, no valuation report has been submitted. In the given facts and circumstances, it is abundantly clear that there is no corroborative evidence of property purchased on the record. As far as the assessment order for the A.Y.1997-98 is concerned, the facts and circumstances are entirely different from what has been stated by the appellant as the same, in fact, relates to the withdrawal of Rs.80,00,00,000/- from the capital account of A.Y. 1995-96, whereas here the total investment is Rs.70.32 lacs only. With the result, the clear cut wealth tax liability of the appellant is Rs.1,01,96,000/- (i.e. keeping in view the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e No. allotted was 2108/1. W.T.O. assessed the property in question as land with incomplete construction which was liable to tax u/s. 2(ea) of the W.T.Act. The W.T.O. adopted the valuation by considering 15% towards appreciation in each of the years under consideration and worked out the net wealth as under:- Assessment Year. Assessed net wealth (Rs.) 1999-00 1,01,96,000/- 2000-01 1,12,51,000/- 2001-02 1,23,06,000/- 2003-04 1,61,00,000/- 10. The Ld. A.R. submitted that the construction made in the house was after seeking approval from the Competent Authority. It was further stated that the assessee had claimed deduction 54F on the purchase of aforesaid house. As per the provision of Sec. 54F the deduction is available only when a residential house is purchased. He also submitted the details of expenses incurred for the construction of house which was placed on page 104 to 106 of the paper book. He further pointed out to the finding of ACWT for A.Y. 1997-98 (page 135 of the paper book) wherein he has held as under:- "The status of the land as such has further been examined with that in subsequent years. It is noticed that there is no change in the status of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that "the assessee possesses agricultural land which is not urban land as defined u/s. 2(ea) of the Wealth tax Act." He pointed out that in the copy of English Translation of the sale deed submitted and which is on page 452 of the paper book it has been stated that the land in question is a "non agricultural land". The Ld. D.R. further pointed out that in the submission before W.T.O. it has been stated that the assessee has sold "residential house with land". The Ld. D.R. therefore stated that the assessee has been taking contradictory stand at different times. He is treating it as "agricultural land" in the return, disclosing it as "non agricultural land" in the sale deed and showing it as a "residential house" in the submissions made before the W.T.O. The Ld. D.R. submitted that what was sold was vacant land as there was no evidence of even ground floor being completed on the land. He pointed out to the copy of English translation of sale deed on page 477 of the paper book wherein it was stated that "non agricultural land admeasuring 3059.50 sq. mtrs construction with ceiling slab incomplete construction is done. On the said construction there is no plaster done, flooring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er obtaining the permission from appropriate authorities, the five plots were consolidated into one single final plot. The assessee commenced construction of residential house on the said plot on 8-9-94 and the construction continued upto 30-9-1995. It is the assessee's contention that on the ground floor he has constructed a residential house and before the construction of first floor was completed, the assessee sold the entire premises for a price of Rs.1.61 crore. The fact of purchase of land, commencing of the construction of residential house on the said land and the sale of land is not in dispute. The only dispute is the present appeal before us is whether the land was an "asset" within the meaning of section 2(ea) of the Wealth tax Act,1957 and therefore liable to Wealth tax or the land along with the superstructure can be considered as "residential house" and therefore can be considered to be an exempted asset u/s. 5(vi) of the Wealth Tax Act,1957. The relevant provisions of the Wealth tax Act for the purpose of present appeals are as under: "Definitions: 2. In this Act, unless the context otherwise requires,.... (ea) "assets", in relation to the assessment year commenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n area of five hundred square metres or less." 14. On a bare reading of the provisions of S. 2(ea) it becomes evident that the definition of 'urban land' does not envelop that land on which construction of a building is not permissible under any law for the time being in force in the area where the land is situated or the land occupied by any building which has been constructed with the approval of the appropriate authority or to any unused land held by an assessee for an industrial purpose for a period of two years from the date of its acquisition or any land held by an assessee as stock-in-trade for a period of ten years from the date of acquisition by him. On reading the provisions of Sec. 5(1)(vi), it becomes evident that exemption from wealth tax u/s. 5(1)(vi) is available in respect of one house or part of a house belonging to an individual or and Hindu Undivided Family. Exemption from wealth tax is also available to a plot of land comprising an area of 500 sq. mts or less as it is not considered as an "asset" within the meaning of section 2(ea). 15. The contention of the Ld. A.R. is that since the assessee has constructed residential house on the ground floor of the land, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at "the word "house" has no statutory definition and therefore, it has to be given the common parlance meaning. The dictionary meaning for the words seems to be "building for dwelling in, a building in general, a dwelling place". It also conveys the meaning of "abode, habitation, etc." Though the concept of residence has been omitted from the provision by amendment, "house" or "a part of a house" cannot cover a situation where the house is not habitable. Where the house is in the process of construction and, on account of the fact that it is not complete, has not reached a habitable stage, the concept of a house cannot be extended to cover such an incomplete construction. The submission of counsel for the assessee that the use of the words "a part of the house" has the meaning of an incomplete house is of no importance. Obviously, Parliament has intended to exempt a part of the house where the assessee's interest extends to a part of it. The concept of habitability is inherent in the word "house" and unless it is habitable, the abode would not answer the commonness meaning of a house". 18. In the case of CWT vs. Giridhar Yadalam (2010) 325 ITR 233 (Kar), it was argued that since t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he prescribed limit of 500 sq. mts and the house is incomplete, the assessee will not be entitled to deduction on the incomplete construction and accordingly the assessee would be liable to wealth tax on value of plot exceeding 500 sq.mts along with the cost of incomplete construction. The A.O. is directed to recompute the net wealth of the assessee accordingly. Thus this ground of the assessee is partly allowed. 21. The third ground is with respect to reference to District Valuation Officer, wherein the assessee has challenged the authority of the A.O. to value the taxable asset. 22. Value of an asset for an assessment year is to be declared as on the relevant valuation date. Valuation date in relation to an assessment year under the Wealth tax Act, 1957 means the last day of the previous year as defined in Sec.3 of the I.T. Act, 1961. The value of an asset is to be determined on the basis of rules of Schedule-III. The details of calculation of the value of each asset under the relevant rule is required to be attached with the Return of Wealth. As per the provisions of Sec. 16(4) of W.T. Act, the W.T.O. is required to serve a notice requiring him to produce such accounts, record ..... X X X X Extracts X X X X X X X X Extracts X X X X
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