2015 (2) TMI 51 - AT - Wealth-tax

Enhancement in value of land - Whether the first appellate authority has erred in confirming the addition made by the AO towards enhancement in the value of the land owned by the firm where the appellant is a partner - Held that - Tribunal has upheld the first appellate order in that case wherein the first appellate authority had held that the Assessing Officer should have taken the value of assets as reflected in the balance-sheet. In this regard the first appellate authority had follow the first appellate order on similar additions in the earlier years wherein the first appellate authority had noted that as per Rule 14 of Schedule III for valuing asset of business Sub Rule 2 (ii) of Rule 14 states in the case of an asset on which no depreciation is admissible, its book value. Respectfully following the above decisions in the present appeals we hold that the land being used as business asset, its value was to be determined as per Rule 14 and not as per Rule 20 of Schedule III. Consequently, the orders of the authorities below on the issue are set aside with the direction to the AO to delete the addition made on account of enhancement in the value of land owned by the Firm where the appellant is a partner. - Decided in favour of assessee.

Summary

Issues:
1. Whether the first appellate authority erred in confirming the addition made by the AO towards enhancement in the value of land owned by the firm where the appellant is a partner.

Analysis:
The appellant challenged the first appellate order on various grounds, primarily disputing the addition made by the Assessing Officer regarding the land's value owned by the firm. The appellant argued that the valuation of the land should have been done according to specific rules under the Wealth Tax Act 1957, rather than the arbitrary basis used by the authorities. The appellant also criticized the reliance placed on a previous order involving different circumstances. The appellant contended that the land in question was a business asset and emphasized that previous assessments had accepted the values provided by the assessee. Additionally, the appellant referenced a Tribunal order in a related case to support their position.

The Appellate Tribunal examined the contentions of both parties and reviewed the orders of the authorities below. The Assessing Officer had increased the appellant's taxable wealth by enhancing the land's value owned by the firm, applying Rule 20 of the Wealth Tax Act 1957. However, the appellant argued that the land's valuation should have followed different rules specified in the Act. The first appellate authority upheld the AO's action, noting previous relief granted in similar cases. The Tribunal referenced a decision involving a different entity to support the appellant's argument that the land, being a business asset, should be valued according to specific rules.

The Tribunal also considered a decision from the Jurisdictional High Court related to a similar case, emphasizing the importance of valuing immovable property as per specific rules under the Wealth Tax Act. Consequently, the Tribunal upheld the first appellate order, directing the AO to delete the addition made on account of the land's enhanced value. The Tribunal ruled in favor of the appellant, allowing the appeals and rejecting the ground related to the alleged lack of proper opportunity provided by the first appellate authority. The judgment was pronounced on July 31, 2013.