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Wealth Tax Officer, Ward-10 (1) , Hyderabad and Dy. Commissioner of Wealth Tax, Circle-10 (1) , Hyderabad Versus Sri Ch. Gopal Reddy, Secunderabad

2016 (3) TMI 46 - ITAT HYDERABAD

Taxing Agricultural lands - Land-in-question treated as ‘asset’ under the Wealth Tax Act - Held that:- So long as the lands are agricultural in nature, the same cannot be treated as ‘capital asset’ in view of the provisions of Wealth Tax Act. Section 2(ea) of Wealth Tax Act defines ‘asset’ in relation to assessment year commencing on 1st April, 1993 in which urban land is included as an asset. Explanation 1(b) defines urban land means, land situated in any area which is comprised within the juri .....

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e records of the Government and used for agricultural purposes, it cannot be treated as an ‘asset’ for the purpose of WT Act. In fact the ground raised by the Revenue is not maintainable in the sense, that linking of agricultural income to agricultural land is not required and therefore, Ld. CIT(A) is not bound to do that exercise which is not prescribed by the Act. It is the AO who should have examined these matters at the time of assessment and should have verified whether the land is classifi .....

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erfere with the order of the CIT(A) - Decided against revenue

Addition on the valuation of buildings other than self occupied buildings - whether CIT(A) deleted the addition without linking the income from house property? - Held that:- When assessee is offering the rental income from the buildings and those properties which are not to be included as assets were included without any discussion by the AO, we are of the opinion that Ld. CIT(A) has correctly examined and deleted the addit .....

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e seven appeals are by Revenue against the orders of the Commissioner of Income Tax (Appeals)-4, Hyderabad dated 25-02-2015 (WTA Nos. 18, 19, 20 & 21/Hyd/15) and dt. 26-02-2015 (WTA Nos. 15, 16, 17/Hyd/15). In all these appeals, Revenue has raised common grounds as the above persons are co-sharers of the properties and CIT(A) has passed similar but separate orders in these cases. There is one appeal for AY 2009-10 and rest are for AY 2007-08. 2. We have heard Ld. DR and Ld. Counsel and perus .....

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e, the CIT(A) erred in not finding that the assessee did not offer rental income from the buildings which are included in the net taxable wealth. In the absence of such facts, the CIT(A) cannot delete the addition without linking the income from house property to the buildings included in the net wealth. 4. Any other ground that may be urged at the time of hearing . Ld. DR fairly admitted that Ground Nos. 2 & 4 does not require any consideration. For the sake of consideration appeal in WTA N .....

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as brought various lands held by assessee and shown as agricultural land to treat them as taxable assets . Before the Ld. CIT(A) it was claimed that the properties under reference are agricultural lands and agricultural operations have been carried on this land and assessee has admitted agricultural income. It was claimed that addition should be deleted as the properties-in-question are not capital assets. After considering the assessee submissions, Ld.CIT(A) deleted partly, therefore Revenue is .....

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laimed that the properties under reference are agricultural lands. In support of the same, the title deeds of the properties have been produced. Further, it was claimed by the appellant that agricultural portions has been carried on, on this land and the appellant has admitted agricultural income to the tune of ₹ 3,51,600/-. In view of the above, it was claimed that the addition made should be deleted as the properties in question are not capital assets. 6.2 The submissions of the appellan .....

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iew of the provisions of Wealth Tax Act. Section 2(ea) of Wealth Tax Act defines asset in relation to assessment year commencing on 1st April, 1993 in which urban land is included as an asset. Explanation 1(b) defines urban land means, land situated in any area which is comprised within the jurisdiction of a municipality etc within a distance of not being more than 08 KMs from the local limits of a municipality etc. However, proviso has been amended by the Finance Act, 2013 w.e.f. 01-04-1993 so .....

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king of agricultural income to agricultural land is not required and therefore, Ld. CIT(A) is not bound to do that exercise which is not prescribed by the Act. It is the AO who should have examined these matters at the time of assessment and should have verified whether the land is classified as agricultural land or not? Then, the question of agricultural operations comes into picture. As seen from the assessment order, AO has not even discussed, why he is treating the agricultural land as asset .....

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uildings. In the assessment, the share of assessee in various buildings owned by assessee has been valued and added to the net wealth. AO has not made any discussion why the addition is made. AO has increased the value as disclosed by assessee by 25% of the above assets. Ld. CIT(A) discussed each of the property as under: 7. The Ground Nos. 20 and 21 relate to the addition on account of valuation of buildings other than self occupied. The share of the appellant in various buildings owned by the .....

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at Kompally: This was leased out and a rent of ₹ 9,94,368/- was admitted in the return of income filed. 3) 1/2 share in Building at Shapur Nagar: This was leased out and a rent of ₹ 1,80,000/- was admitted in the return of income filed. 4) 1/4th share in Building at Suraram : The building was under construction and hence no rental income was admitted in the return of income filed. 5) ½ share in Building at Balanagar: This was leased out and a rent of ₹ 3,78,000/- was ad .....

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f ₹ 2,87,424/- was admitted in the return of income filed. 10) Building at Kompally: This was leased out and a rent of ₹ 9,94,368/- was admitted in the return of income filed. 11) The shop at MJ Colony, Shapur is purchased in the previous year 2008-09 relevant for the A. Y. 2009-10. The building could not be let out during the previous year for want of repairs. The appellant humbly submits that as the buildings were leased out or were used by the assessee, they cannot be considered a .....

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n view of the above, the above assets cannot be treated as assets for the purpose of wealth tax and the addition made is deleted . 7. We do not understand how the Revenue could raise the ground stating that assessee did not offer rental income and Ld. CIT(A) deleted the addition without linking the income from house property. When assessee is offering the rental income from the buildings and those properties which are not to be included as assets were included without any discussion by the AO, w .....

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WTA No. 15/Hyd/2015: 10. The issue in Ground No. 1 is with reference to the deletion of net wealth assessed on agricultural lands by the Ld. CIT(A). While completing the assessment on the basis of the statement issued by assessee, Assessing Officer (AO) has brought various lands held by assessee and shown as agricultural land to treat them as taxable assets and made an addition of ₹ 31,77,538/-. Before the Ld. CIT(A) it was claimed that the properties under reference are agricultural lands .....

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the AO, the addition was deleted. 12. Revenue contends that Ld. CIT(A) should have linked the agricultural income offered on the lands to the net wealth included before deleting the additions so made. 13. After considering the rival contentions, we are of the opinion that there is no merit in Revenue s ground. So long as the lands are agricultural in nature, the same cannot be treated as capital asset in view of the provisions of Wealth Tax Act. Section 2(ea) of Wealth Tax Act defines asset in r .....

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Government and used for agricultural purposes . This indicates that even if a land is situated within 08 KMs of a town or municipality as specified, if such land is classified as agricultural land in the records of the Government and used for agricultural purposes, the same cannot be treated as an asset for the purpose of WT Act. In fact the ground raised by the Revenue is not maintainable in the sense, that linking of agricultural income to agricultural land is not required and therefore, Ld. C .....

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ted as asset under the Wealth Tax Act, we do not see any reason to interfere with the order of the CIT(A). There is no merit in the Revenue s grounds. Accordingly, the same is dismissed. 14. Ground No. 3 pertains to the addition on the valuation of buildings other than self occupied buildings. In the assessment, the share of assessee in various buildings owned by assessee has been valued at ₹ 1,56,250/- and added to the net wealth. AO has not made any discussion why the addition is made. A .....

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. After considering the submissions of the DR and Counsel, we are of the opinion that there is no need to interfere with the orders of the Ld. CIT(A). In fact, the ground raised is also not correct. When assessee is offering the rental income from the buildings and those properties which are not to be included as assets were included in the definition of asset without any discussion by the AO, we are of the opinion that Ld. CIT(A) has correctly examined and deleted the addition, which cannot be .....

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