TMI Blog2015 (8) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... t which portion of the land being 790sq.meters declared excess would be demarcated and acquired by the Govt. Therefore, there is uncertainty not only with reference to the right of construction but also which portion of the land would be allotted to the assessee. In view of this uncertainty, we cannot value the property as per the Sub Registrar valuation adopted by the AO holding that the assessee has complete rights over the property. Further as per Explanation-1 of section 2(ea) it has been categorically stated that where construction of building is not permissible under any law for the time being in force, the same does not come under the definition of asset for Wealth Tax purposes. There is no dispute that the land in question is covered by the ULCA and the assessee can neither alienate the land, nor construct any building thereon. Therefore, since the asset on valuation date is restricted by the ULCA and further exemption was granted only on 7.4.2008, we are of the opinion that the Revenue Authorities wrongly assessed the value of the land as on valuation date at ₹ 7.49 crores, we direct the AO to exclude this amount - Decided in favour of assessee. - WTA No.1/Hyd/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessee had been restricted and that though the assessee was in physical possession of the land, he did not have the right to its enjoyment through construction on it or the right to alienate it. The AR relied on the decision in the case of CWT. Vs. Sri Srikantadatta Wadiyar (2005) 279 ITR 226 (Kar.) where it was held that once the competent authority had issued notification under the ceiling act, the land is deemed to have been acquired by the govt.and the assessee had only a right to receive compensation. The AR also relied on the decision in the case of Calcutta Electric Supply Corporation vs. CWT (1971) 82 ITR 154 (S.C). 5. The AR also submitted that without prejudice to the plea that the land was exempt from wealth tax, the valuation could not be taken at market value, but the value which the assessee would get as compensation under the ULCA. The AR relied on the decision in the case of Aims Oxygen Pvt. Ltd vs. CWT (2012) 345 ITR 456 (Guj.) in this regard. 6. The CIT (A) observed that out of the total land of 1790 sq. meters, a mere 790 sq.meters was the subject matter of ULCA proceedings. Hence there can, be no dispute with regard to the valuation of the 1000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain restrictions in the Urban Land Ceiling Act, which would have a depressing effect on the value of the asset. Even in a case where there is a prohibition under the Act for the sale of such asset, since it is not yet deemed to have become the property of the Government, the valuation had to be made on the assumption that the purchaser would be able to enjoy the property as the holder, in spite of restrictions and prohibitions contained in the Act. The question in such cases whether there is in fact a market and the property could be in fact sold is wholly immaterial. 8. The CIT (A) was of the opinion that the obsrvations of the Court are directly applicable to the facts in the assessee s case, since there was no order u/s 10 of the ULCA in this case and therefore, the AO has rightly proceeded to value the SRO rate which is reasonable and acceptable method of valuation. The CIT (A) pointed out that the adoption of compensation under ULCA as the value of the land has been ruled out by the Court in the decision cited namely, CWT. Vs. Sri Srikantadatta Wadiyar (2005) 279 ITR 226 (Kar.). The CIT (A) was of the opinion that until such time the order u/s 10 of the ULCA i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have been acquired by the Government and the assessee had only a right to receive compensation. 15. It was submitted that the Assessee had made an application under section 20 for exemption for surrender of excess land. However the said exemption was granted on 7/4/2008. It is also submitted that wealth tax is levied on the wealth as on the last day of the financial year. The ld Counsel relied on the decision of Hon'ble Supreme Court in the case of Calcutta Electric Supply Corporation reported at 82 ITR 154 wherein it was held that subsequent events regularizing the title or other such events cannot be taken into consideration in determining the value of the wealth. 16. The ld Counsel further stated that the Hon'ble Supreme Court in 82 ITR 154 has stated as follows: Section 7 of the Act does not take note of hypothetical possibilities in the matter of valuation of the Assets. It merely concerns itself as what is the true market value of the asset in question on the valuation day'. 17. It is therefore submitted that as the value on the valuation date being restricted by the Urban Ceiling Act the same cannot be taken for the purpose of wealth, as no c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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