TMI Blog2023 (1) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... Wealth Tax Vs Shravan Kumar Swarup Sons [ 1994 (9) TMI 2 - SUPREME COURT] No ambiguity to the fact that the value of the property has to be determined in accordance to the method prescribed under the Wealth Tax Act and without making any reference to the valuation done for any other purpose under any other Act. In our humble understanding, the case laws referred by the learned Commissioner of Wealth Tax (Appeals) in his order in the case of K.E.M.I Kwaja Mohideen V. Income Tax Officer Ward I(1) Nayapattinam [ 2019 (7) TMI 1442 - MADRAS HIGH COURT] is not applicable in the given facts and circumstances for the reasons as discussed above. As such the issue before The Hon ble High Court of Madras was with regard to computation of capital gain under section 48 of the Income Tax whereas the issue before us is related the valuation of property for the purpose of wealth tax. Allahabad High Court in the case of CIT vs. Padampat Singhania [ 2016 (11) TMI 708 - ALLAHABAD HIGH COURT] has held that the value asset/property is govern by section 7 of wealth tax Act read with Schedule III of Wealth tax Act We are of the opinion that the valuation of the bungalow in dispute has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax (appeal) erred in confirming the order of the AO by sustaining the addition of Rs. 31,70,225 to the wealth of the assessee on account of immovable property. 5. The facts in brief are that the assessee in the present case is an individual and has disclosed certain assets including the immovable property (bungalow) at ₹ 37,88,500.00 in the financial statement as on 31st of March 2012. However the assessee in the wealth tax return has valued the bungalow at ₹ 6,18,375.00 only leading to the difference of ₹ 31,70,225.00 only. The AO questioned the impugned difference in the valuation of the bungalow shown in the income tax return viz or viz wealth tax return, the assessee submitted that for the purpose of the wealth tax the value of the property being immovable property has to be determined in the manner laid down in schedule III of the Wealth Tax Act. For the purpose of valuation of the building as per Wealth Tax Act, first the assessee has to determine the annual rent. Annual Rent has to be multiplied by the factor 12.5 to work out the value of the property for the purpose of the wealth tax. As per the assessee the value of the property was worked out at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax is worked out at ₹ 6,18,375.00 which should be included in the net wealth of the assessee for the purpose of the wealth tax after ignoring the value of the bungalow declared in the balance sheet filed with the income tax return. The learned AR in support of his contention has filed the municipal taxes receipt placed on pages 11 and 12 of the paper book which was also filed before the authorities below. However, the lower authorities without appreciating the same has concluded that the assessee has not filed any documentary evidence in support of the valuation shown for the bungalow in dispute. 9. On the other hand the learned DR vehemently supported the order of the authorities below. 10. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we find that the controversy relates to whether the property for the purpose of wealth tax has to be valued as per the provisions of wealth tax Act or the value of the property declared in the income tax return can be adopted for the purpose of the wealth tax. In this regard we are inclined to refer the provisions of section 7 of the Wealth Tax Act wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of such assessment, or, if there is no such assessment or the property is situated outside the area of any local authority the amount which the owner can reasonably be expected to receive as annual rent had such property been let. ************** 10.2 The clause 4 of part B of schedule III provides the manner to work out the Annual maintainable rent as gross maintainable rent reduced by tax levied by local authority or 15% of gross maintainable rent. As per the sub-clause (ii) of clause 5 of part B of schedule-III, the gross maintainable rent in case of the property which is not let out, it has to be computed on the basis of the annual rent assessed by the local authority. Admittedly, the property in dispute is situated within the local authority. The annual value as per the local authority was determined at Rs. 49,470.00 only. All these details were furnished by the assessee before the authorities below which is evident from the submission made by the assessee before the AO. The same is also incorporated in the assessment order. The relevant extract of the assessment order is reproduced as under: At this stage attention is drawn to section 7 of the Wealth Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as it stood during the relevant period, i.e., prior to 1-4-1989 when it stood substituted by the Direct Tax Laws (Amendment) Act, 1989 with effect from 1-4-1989 provided 10.5 From the above provisions, there remains no ambiguity to the fact that the value of the property has to be determined in accordance to the method prescribed under the Wealth Tax Act and without making any reference to the valuation done for any other purpose under any other Act. In our humble understanding, the case laws referred by the learned Commissioner of Wealth Tax (Appeals) in his order in the case of K.E.M.I Kwaja Mohideen V. Income Tax Officer Ward I(1) Nayapattinam reported in [2019] 110 taxmann.com 304 (Madras) is not applicable in the given facts and circumstances for the reasons as discussed above. As such the issue before The Hon ble High Court of Madras was with regard to computation of capital gain under section 48 of the Income Tax whereas the issue before us is related the valuation of property for the purpose of wealth tax. 10.6 The Allahabad High Court in the case of CIT vs. Padampat Singhania reported in 82 taxmann.com 106 after considering the judgment Hon ble Supreme Court (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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