2014 (7) TMI 1376 - AT - Wealth-tax

Wealth tax assessment - leasehold rights in the land whether be brought to Wealth Tax under the deeming provisions of Section 4(8) of the Act - HELD THAT - Respectfully following the earlier ITAT judgements in assessee's own case the issues relating to property at Raniwala Oil Mills, property at Mangal Marg, Alwar, property at Rishikesh and property at Kush Marg, Alwar as raised by the Revenue in 1 to 3 and 5 are dismissed. Property at Station Road, Alwar also, we see no infirmity in the order of the ld. CWT(A) as on the valuation date the property had become the commercial complex and reflected as commercial asset in the accounts of the assessee which is further evident from the fact that some of the shops were also sold. Thus the building in question was a commercial complex which is not includible in the definition of Section 2(ea)(i) of the Act. Besides, the issue in question is also covered in favour of assessee by the decision of Hon'ble Kerala High Court in the cae of Apollo Tyres Ltd. 2009 (12) TMI 572 - KERALA HIGH COURT - Thus the ground no. 4 of the Revenue is dismissed. Property at Nangali Khor, it has not been disputed that in lieu of assessee's two plots, the impugned plot was allotted to the assessee for 99 years lease. As per plain meaning of legal fiction of section 4(8) of the Wealth Tax Act, it applies only to leasehold right in a building and not on the land. The scope of fiction cannot be enlarged by intendment. In view thereof, we see no infirmity in the order of the ld. CWT(A) which has been passed keeping in view the plain meaning of Section 4(8) of the Wealth Tax Act and the decisions of Hon'ble Supreme Court in the case of CWT vs. Biswanath Chatterjee 1976 (4) TMI 1 - SUPREME COURT and case of Vysya Bank Ltd. 2007 (2) TMI 161 - KARNATAKA HIGH COURT . Thus the order of ld. CWT(A) is upheld. The ground raised by the Revenue is dismissed.

Summary

Issues Involved:
1. Deletion of addition on account of property at Raniwala.
2. Deletion of addition on account of property at Mangal Marg.
3. Deletion of addition on account of property at Rishikesh.
4. Deletion of addition on account of property at Station Road, Alwar.
5. Deletion of addition on account of property at Kush Marg, Alwar.
6. Deletion of addition on account of property at Nangli Khor.

Detailed Analysis:

1. Property at Raniwala:
The Revenue contended that the AO's addition of Rs. 5,64,20,638/- was justified due to the property being within an urban area and lacking a functioning oil mill. The ld. CWT(A) deleted this addition, which the ITAT upheld by referencing its previous decision in the case of the other co-owner, holding that the facts were identical and thus not includible in the wealth chargeable to tax.

2. Property at Mangal Marg:
The Revenue argued that the AO's addition of Rs. 19,6,913/- was correct as the property was urban land within municipal limits. The ld. CWT(A) deleted this addition, and the ITAT upheld this decision, citing its earlier judgment which held that the property was under civil dispute and not an asset in the form of urban land.

3. Property at Rishikesh:
The Revenue's position was that the land, although initially agricultural, should be treated as urban land. The ld. CWT(A) deleted the addition of Rs. 6,00,000/-, and the ITAT upheld this decision, referencing its earlier order which confirmed the land was agricultural and not urban, thus not liable to wealth tax.

4. Property at Station Road, Alwar:
The Revenue contended that the property was commercial and should be taxed. The ld. CWT(A) deleted the addition of Rs. 2,74,26,025/-, noting that the land had been converted for commercial use and was under construction as a commercial complex, thus falling outside the definition of urban land under Section 2(ea) of the Wealth Tax Act. The ITAT upheld this decision, referencing the Kerala High Court's ruling in Apollo Tyres Ltd. which supported the exemption of such properties from wealth tax.

5. Property at Kush Marg, Alwar:
The Revenue argued the property was benami and should be included in the assessee's wealth. The ld. CWT(A) deleted the addition of Rs. 36,39,070/-, and the ITAT upheld this decision, referencing its earlier judgment which confirmed the property was in the name of the assessee's daughters and thus not includible in the assessee's wealth.

6. Property at Nangli Khor:
The Revenue contended that the property should be taxed as it was allotted on a 99-year lease. The ld. CWT(A) deleted the addition of Rs. 6,28,35,500/-, noting that the leasehold rights did not constitute ownership and thus were not part of the net wealth under Section 2(m). The ITAT upheld this decision, referencing the Supreme Court's ruling in CWT vs. Bishwanath Chatterjee and the Karnataka High Court's judgment in Vysya Bank Ltd. which supported the exclusion of leasehold land from wealth tax.

Conclusion:
The ITAT dismissed the Revenue's appeal on all grounds, affirming the ld. CWT(A)'s deletions of the additions made by the AO. The decisions were based on previous ITAT judgments, legal interpretations of the Wealth Tax Act, and relevant case law, ensuring the properties in question were not includible in the assessee's wealth for the relevant assessment year. The order was pronounced in open court on 18th July 2014.