2002 (10) TMI 338 - AT - Wealth-tax

Whether charging section of Act has to be construed strictly and incomplete building/building under construction cannot be added in net wealth of assessee

Summary

Issues:
1. Valuation of incomplete building under construction for wealth tax assessment.
2. Valuation of motor cars for wealth tax assessment.

Issue 1: Valuation of incomplete building under construction for wealth tax assessment

The appeal concerned the inclusion of the value of a building under construction at Gangapur Road, Nasik in the net wealth of the assessee for the assessment year 1997-98. The assessee argued that as the building was incomplete on the valuation date, it should not be considered an "asset" under section 2(ea) of the Wealth Tax Act. The assessee relied on the absence of specific rules for valuing incomplete buildings and cited a decision of the Orissa High Court in support. The Departmental Representative contended that the assessee did not initially claim non-inclusion of the incomplete building and raised the issue later. The Tribunal held that the definition of "assets" under the Act did not explicitly include incomplete buildings. As the value of the plot was already included in the wealth computation, the Tribunal ruled that the incomplete building's value should not be added to the net wealth of the assessee. The appeal on this ground was allowed in favor of the assessee.

Issue 2: Valuation of motor cars for wealth tax assessment

The second ground of appeal involved the valuation of 42 motor cars owned by the assessee. The assessee declared the value of these cars at Rs. 48,62,300, while the Assessing Officer assessed them at Rs. 81,66,911, allowing a 15% reduction. The Commissioner of Wealth Tax (Appeals) upheld the valuation at Rs. 81,66,911 but restricted the deduction to 10%, resulting in an enhanced assessment. The assessee argued for accepting the value based on a valuer's certificate. The Tribunal acknowledged the need for a suitable discount from the insurance value to determine the fair market value of the cars. After considering the submissions, the Tribunal decided to allow a 20% discount on the insurance value and directed that 80% of the insurance value be taken as the value of the motor cars. Consequently, the appeal on this ground was partly allowed in favor of the assessee.

In conclusion, the Appellate Tribunal ITAT Mumbai, in a judgment for the assessment year 1997-98, addressed issues related to the valuation of an incomplete building under construction and the valuation of motor cars for wealth tax assessment. The Tribunal ruled in favor of the assessee regarding the incomplete building, stating that its value should not be included in the net wealth. For the motor cars, the Tribunal allowed a 20% discount on the insurance value, directing that 80% of the insurance value be considered as the value of the cars. As a result, the appeal of the assessee was partly allowed on both grounds.