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2015 (8) TMI 1101 - ITAT HYDERABAD

2015 (8) TMI 1101 - ITAT HYDERABAD - TMI - Valuation - Whether the CWT(A) is right in deleting the additions made to the taxable wealth in conformity with S.7, Schedule III, Part H of the Wealth-tax Act read with Rule 20 of the Wealth-tax Rules - Held that:- Assessee has relinquished his rights in the property in question for a consideration of ₹ 2.45 crores in the previous year relevant for assessment year 2008-09, and accordingly offered the capital gains arising from the said transactio .....

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d by the State Government Authorities for purpose of determining the stamp duty. But the Assessing Officer proceeded with the assessments adopting the amount of ₹ 2.45 crores received by the assessee in terms of settlement deed in the assessment year 2008-09.

There is a prescribed rule of valuation of asset being land and building as per Wealth Tax Act. As per the said rule, the value of asset shall be taken at the valuation date by resorting to any of the modes specified in th .....

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assessee in terms of settlement in the assessment year 2008-09, as the value of the property on the relevant valuation dates of the preceding three years, without any basis. The assessee, on the other hand, rightly adopted the circle rate of properties being the fair market value of the assets for the purpose of wealth tax assessments. - valuation taken by the assessee as per circle rates in the relevant years, deserves to be accepted - Decided in favour of assessee. - C.O.No.38/Hyd/15(in WTA No .....

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h-tax Act, 1957. 2. The main issue involved in these appeals, in which common grounds raised by the Revenue, is whether the learned CWT(A) is right in deleting the additions made to the taxable wealth in conformity with S.7, Schedule III, Part H of the Wealth-tax Act read with Rule 20 of the Wealth-tax Rules. 3. Brief facts of the case are that the assessee is an individual. He had relinguished his rights/title/interest in some pieces of land situated at Hydernagar during the previous year relev .....

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ax Act, for the three years under consideration. 4. In response to the notices under S.17 of the Wealth-tax Act issued by the Assessing Officer, the assessee has filed returns, declaring net wealth at ₹ 1,85,900, ₹ 16,93,500 and ₹ 20,97,100 for the assessment years 2005-06 to 2007-08 respectively. During the course of assessment proceedings, Assessing Officer issued notices under S.16(2) of the Act, calling for certain information, and requiring the assessee to explain why the .....

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nnot be included as belonging to the assessee as on the relevant valuation date. The assessee also explained that he has acquired certain lands, being Plots 16A, 49A, 232A and 232B (aggregating to 1,017 sq. yards) in survey No.172 of Hydernagar Village, RR district vide Sale deed No.919/90 dated 22.1.1990 and 2202/90, 17.2.21990 from Satyasai Cooperative Housing Building Society, Hyderabad. Subsequently, Goldstone Exports Pvt. Ltd. and 15 others claimed that 98 Acres 10 Guntas in Survey No.172 o .....

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tually settled the disputes by entering into Memorandum of Compromise dated 16.3.2008 and received compensation of ₹ 2.45 crores. According to the Assessing Officer, the assessee had relinquished his rights in the property and received an amount of ₹ 2.45 cores and therefore, the value to be adopted for computation of wealth-tax is ₹ 2.45 crores only. Before the Assessing Officer, assessee contended that he is not the owner of the assets as the AP High Court has even dismissed .....

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by the Assessing Officer for the follow reasons given in paras 6.1 and 6.2 of the impugned order for the years under consideration. 6.1 According to the assessee, his ownership over the plots of land in question is not established in the first place. As submitted by him, his claim of ownership had had been turned down by the High Court, Thus according to him, he had right/title/interest in the land (which fell short of complete ownership). Consequently, the market value of the asset would be les .....

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term capital gains in the assessment year 2008-09, on an amount which was received by him as compensation against relinquishment of all rights on the said property does not automatically make that amount to be market value of the valuation date of all the assessment years for the purpose of Wealth Tax Act. There are special provisions and rules to determine the value in the Wealth Tax Act. 6.2 Circle rate is the official index of fair market value of a piece of land. Hence, the value adopted by .....

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ired his right/title/interest in the assessment years under consideration. If that were the case, the asset could have been transferred in assessment year 2005-06 itself. If, after protracted litigation, it thought it preferable to pay ₹ 2.45 Crore to the assessee in assessment year 2008-09, it would be reasonable to hold that the apparently excess price paid by it was in lieu of the opportunity cost. Such opportunity cost may be specific to the buyer in question; in cannot be read into op .....

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ue of the assets in question has already been determined by the compromise deed entered into by the assessee. He further submitted that with regard to these properties, the price is already fetched by the assessee by way of sale/settlement on account of relinquishment of rights for a value of ₹ 2.45 crores, and therefore, the value of the assets in question should be adopted at ₹ 2.45 crores, for the purposes of computing the taxable wealth for the years under consideration. He accor .....

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ion for a consideration of ₹ 2.45 crores in the previous year relevant for assessment year 2008-09, and accordingly offered the capital gains arising from the said transaction for assessment under the income-tax Act, in the return filed for that year. Based on the same, the Assessing Officer was of the view that the assessee has assets chargeable to wealth-tax in the assessment years under consideration and they escaped assessment, and accordingly issued notice under S.17 of the Wealth-tax .....

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erty in question was under dispute during the relevant period, and even the Hon'ble A.P. High Court dismissed the petition filed by the assessee, and therefore, the market value of the prope in question on the relevant valuation dates would be less than the settlement amount received by him on compromise. In support of this plea, assessee is also claimed to have furnished the Assessing Officer the comparative sale instances with documents. It is for this reason, it is claimed that the assess .....

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e so, when the interest of the assessee in the said property was under dispute, and even the Hon'ble High Court has dismissed the petition of the assessee filed in that behalf. Circle rate is the index of official rate of market value of properties fixed by the State Government for determining the value for stamp duty purposes. These rates are fixed after considering the relevant factors which surround the properties, which more or less depicts the fair market value of the properties. Compen .....

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purpose of wealth tax valuation. There is a prescribed rule fo valuation of asset being land and building as per Wealth Tax Act. As per the said rule, the value of asset shall be taken at the valuation date by resorting to any of the modes specified in the said rule. In the instant case, the Assessing Officer has taken the received by the assessee in the year 2008-09, as the fair market value of asset for the preceding three years without any basis, which in our opinion is not correct. The Asses .....

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