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Sh. M. Balasubramaniam Versus The Deputy Commissioner of Income Tax

2016 (2) TMI 769 - ITAT CHENNAI

Inclusion of land into net wealth - valuation - it was argued that, since the road alignment was not finalized and it is not known on which part of the land the proposed road passes through unless the concerned authority, namely, Chennai Metropolitan Development Authority, finalizes the alignment of the proposed 100 ft. road across the land, it cannot be said that the land in question could be used for construction. - Held that:- The Kerala High Court had no occasion to consider the proposal for .....

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any construction over the land. Therefore, this disadvantageous position faced by the assessee cannot be ignored while valuing the land. Since the assessee himself valued the land at ₹ 83 per sq.ft., this Tribunal is of the considered opinion that estimation on the basis of guideline value is not justified. Accordingly, the orders of the lower authorities are set aside and the entire addition made by the Assessing Officer is deleted. - Decided in favor of assessee. - WTA Nos. 7, 8 & 9/Mds .....

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for the assessee, submitted that the only issue arises for consideration is with regard to value of the landed property at Okkiam Thorapakkam Village, Saidapet Taluk, Chennai, on the date of valuation. According to the Ld. counsel, the assessee owns 9 acres of non-agricultural land. Out of 9 acres of non-agricultural land in Okkiam Thorapakkam Village, 40% of the land has to be provided for amenities such as road, park, etc. Therefore, the marketable title would be with respect to 5.40 acres of .....

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through this said land. Therefore, the Member Secretary, Chennai Metropolitan Development Authority clarified that till the proposed 100 ft. road is finalized, the construction cannot be made / permitted in the land. Since the construction cannot be made, according to the Ld. counsel, the land in question cannot be treated as urban land for the purpose of Wealth Tax Act. The Assessing Officer simply rejected the claim of the assessee and estimated the value at ₹ 1200 per sq.ft. on the basi .....

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essing Officer extracted the observation made by Chennai Metropolitan Development Authority. However, valued the land at ₹ 1200 per sq.ft. According to the Ld. counsel, the construction was not permitted in the land in question, therefore, it cannot be treated as urban land under Section 2(ea) of the Wealth Tax Act. Therefore, according to the Ld. counsel, the subject land cannot be included in the net wealth of the assessee. 3. On the contrary, Sh. Pathlavath Peerya, the Ld. Departmental .....

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nt, found that the value of the land on the valuation date was ₹ 1200 per sq.ft. Accordingly, the land was treated as urban land. Referring to the contention of the assessee that there was proposed 30.5 mtr road in the second Master Plan, the Ld. D.R. submitted that this proposed road was not yet finalized and it was also not demarcated in the land. Therefore, according to the Ld. D.R., mere proposal cannot be a reason for not permitting construction over the land. According to the Ld. D.R .....

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Smt. Sara Varghese (1991) 187 ITR 450 and submitted that valuation has to be made on the basis of material found on record. 4. We have considered the rival submissions on either side and perused the relevant material available on record. We have carefully gone through the provisions of Section 2(ea) of Wealth-tax Act. Section 2(ea) of Wealth-tax Act reads as follows:- (ea) assets , in relation to the assessment year commencing on the 1st day of April, 1993, or any subsequent assessment year, mea .....

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company to an employee or an officer or a director who is in whole-time employment, having a gross annual salary of less than 1[ten lakh rupees] ; Finance Act, 2012 : From April 1, 2013 : In a case where a house is allotted for residential purposes by a company to an employee or officer or director who is in whole time employment such house shall not be included in the definition of assets on which wealth-tax is charged where the gross annual salary of such employee or officer or director is le .....

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year ; (5) any property in the nature of commercial establishments or complexes ; (ii) motor cars (other than those used by the assessee in the business of running them on hire or as stock-in-trade) ; (iii) jewellery, bullion and 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 thatwhere any of the said assets is used by the assessee as stockintrade, such ass .....

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er 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; Jewellery : The terms jewel and jewellery refer to articles of value used for adornment, especially those made from gold, silver or precious stones. T .....

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ary parlance to only those ornaments which have precious stones imbedded in them. Explanation 1 in so far as it includes ornaments made of gold, silver, platinum or other precious metal or alloy, is merely clarificatory in nature. Such items were not excluded from the meaning of the term jewellery earlier : CWT V. BINAPANI CHAKRAVARTY [1995] 214 ITR 721. (b) urban land means land situate- (i) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipalit .....

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lometres, from the local limits of any municipality or cantonment board referred to in sub-clause (i) and which has a population of more than one lakh but not exceeding ten lakh ; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in sub-clause (i) and which has a population of more than ten lakh, but does not include land classified as agricultural land in the records of the Government and used for agricultural purposes or la .....

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. Explanation.- For the purposes of clause (b) of Explanation 1, population means the population according to the last preceding census of which the relevant figures have been published before the date of valuation. Proviso to Explanation 1(b) to Section 2(ea) of the Wealth-tax Act clearly says that the land on which construction of a building is not permissible under any law for the time being in force in the area in which the land is situated, would not form part of urban land. In the case bef .....

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also classified as Coastal Regional Zone-II. The land is situated within 100 mtr. from Buckingham canal. There is a proposal for formation of road to ECR through the subject land and width of the road is 30.5 mtr (100 ft.). It is not in dispute that the proposed 30.5 mtr road is not finalized and it is still in the proposal stage. The authorities concerned could not identify the area of the land through which 30.5 mtr road passes. Therefore, the exact land on which the proposed road passes thro .....

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at all. Since the construction was not permissible till finalization of the proposed formation of the road and demarcation of land in question, this Tribunal is of the considered opinion that construction of the building in the subject land is not permissible. Once the construction is not permissible, the land in question cannot fall within the definition of urban land under Section 2(ea) of the Wealth-tax Act. 5. We have carefully gone through the judgment of Kerala High Court in Mrs. Sara Var .....

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on is near Edappilly, adjacent to metropolitan town Ernakulam. The value of good yielding rubber estate in Thodupuzha may provide a guidance for valuation of similar property. Therefore, considering valuation of rubber estate in Thodupuzha cannot be considered as irrelevant. After considering the rapid urbanization of Ernakulam, the Tribunal fixed the value of land at ₹ 250 per cent, which was confirmed by the Kerala High Court. The Kerala High Court had no occasion to consider the proposa .....

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aluation of quoted shares as on the valuation date. The assessee held shares in Solidaire India Limited, the quoted value is at ₹ 73 per share. The Assessing Officer rejected the claim of the assessee that it should be valued at the book value of ₹ 15.75 per share on the basis of undertaking said to be given by the assessee to Industrial Credit and Investment Corporation of India Limited. However, the Tribunal took the average book value as per quotation of the stock exchange and dir .....

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