2013 (6) TMI 112 - AT - Wealth-tax

Addition of land to assessee s net wealth - CIT(A) deleted the addition - Held that - The map of the area, which is now before us, was not before the AO. This is a question of determining the location of the land in question. Therefore, the location of the land in question can be ascertained either by the spot inspection, or by examining the land records of that area. As apparently, the AO has not done any such exercise, hence, there was lack of investigation at the time of assessment. As it was expected from the CWT(A) to appraise the AO all the evidences which were submitted for the first time at the stage of first appeal restore this ground back to the AO for examining the actual location of the land whether it is a land appurtenant to the factory and whether it is used for the purpose of business of the assessee - this ground of the Revenue allowed for statistical purpose. Inclusion of motor car vehicles to assessee s net wealth - CIT(A) deleted the addition - Held that - There is no fallacy in the finding of the CWT(A)rightly directing the AO to adopt value of the vehicle as per the prescribed rules of W.T.Rules. Against revenue.

Summary

Issues:
1. Addition of land value to assess net wealth under Wealth Tax Act.
2. Inclusion of motor car vehicles in the net wealth chargeable to Wealth Tax.

Issue 1: Addition of Land Value
The appeal involved a dispute over the addition of the land value to the net wealth assessment under the Wealth Tax Act. The Revenue contended that the land, valued at Rs.6,91,15,000, should be considered urban land and included in the assessee's net wealth. However, the assessee argued that the land was used for business purposes and formed part of the factory premises, thus falling under exceptions below Explanation 1(b) of section 2(ea) of the Act. The Commissioner of Wealth-Tax (Appeals) ruled in favor of the assessee, stating that the land, being part of the factory premises, was excluded from being considered an asset under the Act. The Tribunal noted discrepancies in the findings of the Assessing Officer and the Commissioner, emphasizing the need for a proper investigation into the location and usage of the land. Consequently, the Tribunal directed the matter to be sent back to the Assessing Officer for further examination to determine if the land was indeed meant for business purposes.

Issue 2: Inclusion of Motor Car Vehicles
The second issue revolved around the inclusion of motor car vehicles worth Rs.22,41,813 in the net wealth chargeable to Wealth Tax. The Revenue argued that the vehicles should be taxed, while the assessee claimed that the value should be determined after allowing depreciation. The Commissioner of Wealth-Tax (Appeals) rejected the assessee's argument regarding negative net worth and debts incurred in relation to the vehicles. Instead, the Commissioner directed the Assessing Officer to adopt the value of the vehicles as per the written down value in the balance sheet. The Tribunal upheld the Commissioner's decision, stating that the value of depreciable assets, such as the vehicles in question, should be determined based on the prescribed rules of the Wealth Tax Rules. Consequently, the Tribunal dismissed the Revenue's appeal on this ground.

In summary, the Tribunal's judgment addressed the issues of adding land value to assess net wealth and including motor car vehicles in the net wealth chargeable to Wealth Tax. The Tribunal directed further investigation into the location and usage of the land in question and upheld the Commissioner's decision regarding the valuation of depreciable assets like motor car vehicles.