TMI Blog2012 (7) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, drainage and electricity is not done, doors and windows are not installed, the ceilings are in damaged condition. Even the English translated copy of the sales deed which has been signed by both, the sellers and the buyer, states that to use the house for residence, entire fresh construction will have to be put up. Thus present condition of the house in which it exists cannot be considered to be a habitable house. Since in the present case, the area of land is 3059.50 mts. which is in excess of the 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. Challenge the authority of the A.O. to value the taxable asset - Held that:- That the assessee has not filed valuation report along with the return nor was it made available to the WTO during the course of assessment. In such a situation the W.T.O. was left with no other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice, the assessee filed return of net wealth on 3-3-2006 showing net wealth at Rs. Nil. Thereafter the WTO issued letter on 30-11-2006 calling for certain details. In response the assessee interalia stated that the assessee had a plot of land and a residential house appurtenant thereto within the municipal limit of Ahmedabad city. The assessee owned this plot of land since 1994 and had constructed a residential house on the said land in the year 1995-96. The total cost of land was Rs.18.86 lacs, the cost of construction was Rs.54.46 lacs and thus aggregate cost of the house was Rs.70.32 lacs. The said property was shown in the balance sheet as on 31-3-2000, 31-3-2001 and 31-3-2002. As the said residential house along with land was sold by the assessee on 14-10-2002 for Rs.1.61 crores, the said asset was not shown in the balance sheet as on 31-3- 2003. According to the assessee since the property is a land and residential building appurtenant thereto, it falls under the exempted asset as defined u/s. 5(vi) of the Wealth Tax Act, 1957. The assessee had not carried out any valuation for his residential house before its sales in October, 2002. To ascertain as to whether the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lth tax liability of the appellant is Rs.1,01,96,000/- (i.e. keeping in view the facts and circumstances of the appeal under consideration, thereby, taking 15% of value of appreciation in land and assigning 45% share to the year under appeal i.e. A.Y. 1999-00). Keeping in view the aforesaid facts and circumstances, the WTO has rightly determined the net wealth of the appellant at Rs.1,01,96,000/- (i.e. duly considered 15% value of appreciation in land in the given facts and circumstances).With the result, the action of the W.T.O. is hereby confirmed on the account. Hence the appeal is dismissed. 6. Aggrieved by the decision of the C.W.T.(A),the assessee is now in appeal before us. 7. Ground No.1.1 and 1.2 are not pressed at the time of hearing and therefore not adjudicated. 8. Before us, the Ld. A.R. submitted that appellant had purchased land admeasuring 3059.50 sq.mts. from five different parties by executing five different deeds on 16-9-1994. Name of seller. Survey No. Final Plot No. Sub-plot No. Area Cost (Rs.) Addi-Siddhi Financial Pvt. Ltd. 251/1 Paiki 319 Paiki 3 346.33 Sq.Mtrs. 2,07,798/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses 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 land nor any construction activity under taken over the same. There is also no evidence to suggest that there is any change in the status of the land from agricultural to non-agricultural land. In the absence of any such change no construction activity is possible over this land (as per Talati s certificate). Therefore, as long as this land is in the nature and status of agricultural land it cannot be included in the category of assets over which Wealth tax could be charged. 11. The Ld. A.R. also submitted in the paper book the copies of sale deed and its English translation. The Ld. A.R. drew our attention to the page No.452 of the paper book which is an English translation of the Sale Deed where it has been stated that non agricultural land admeasuring 3059.95 sq. mtrs. and 508 sq. mtrs superstructure with inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 is not done. The drainage and electric work is not done. Doors and windows are not installed only the old dilapidated construction with ceiling slab is existing which is also damaged during the earthquake and if it has to be made use of for residential purpose then also the entire fresh construction will have to be put up. Thus, in this manner, the said property in as it is condition that is as is where is basis is sold by the vendor to the vendee. Further to prove the point that the property is not self occupied property, the Ld. D.R. pointed out that the wealth tax assessment order for A.Y. 1997-98 on page 132 of the paper book where the address of the assessee was stated as 203-204 Shakuntal Opp. C.N. Vidayalaya, Ambawadi, Ahmedabad and therefore the house which is the matter of dispute in present appeal cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucture 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 commencing on the lst day of April,1993 or any subsequent year, means: (i) Any building or land appurtenant thereto (hereinafter referred to as house ); whether used of residential or commercial purposes or for the purpose of maintaining a guest house or otherwise including a farm house situated within twenty five kilometers from local limits of any municipality (whether known as Municipality, Municipal Corporation or by any other name) or a Cantonment Board, but does not include .. (v) urban land, . Explanation [1] For the purposes of this clause, (b) urban land means land situate (i) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town area committee, town committee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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, has spent Rs.70.34 lacs on its construction, is paying house tax since 1995-96 in respect of the house to the local Gram Panchayat, is also paying electricity charges goes to prove that the asset is a residential house and therefore he is entitled to exemption from payment of wealth tax in view of the provision to 5(1) (vi) of the Act. On the other hand, the Ld. D.R. has pointed out to the fact that there is no conclusive proof of the expenditure of Rs.70.32 lacs having been actually incurred in view of the fact that the list of expenses includes an expenditure of Rs.42.63 lacs which has been shown to be by way of journal entry, which indicates that the assessee has not actually incurred the expenses of Rs.42.63 lacs. It was further pointed out that the copies of the bills show overwriting in the name of the bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the building was being constructed, the same was exempt u/s. 2(ea)(b) of the Wealth tax. The Hon ble High Court referred to the decision of CIT vs. K.B. Pradhan (supra) and held that what is excluded from the definition of the asset is land occupied by any building which has been constructed. A building in the process of construction cannot be understood as a building which has been constructed. Constructed would mean fully constructed as understood in the common parlance. 19. In the case of Tara Singh vs. DCIT (2005) 97 ITD 482 (Asr.) the Tribunal has held that in order to be entitled to exclusion of the value of asset, it is necessary that there must be a house and it must be occupied for the purpose of business or profession carried on by him. The word house has not been defined in the Act. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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, records or other documents as he may require. As per Sec. 16(5), if the person fails to comply with all the terms of notice u/s. 16(4), the W.T.O. after taking into account, all the relevant material which he has gathered shall estimate the net wealth to the best of his judgment and determine the sum payable on the basis of such assessment. It is an undisputed fact that the assessee has not filed valuation report along with the return nor was it made available to the WTO during the course of assessment. In such a situation, we are of the view that the W.T.O. was left with no other option but to estimate the net wealth based on the material on record. We feel that the estimate made by the WTO is reasonable. We accordingly dismiss this ground of the assessee. W.T.A.No.18/Ahd/2009 for A.Y. 2003-04. 23. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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