2016 (5) TMI 45 - AT - Wealth-tax

Addition of urban land to the net wealth of the appellant-company - Held that - It is assessee s contention that assessee has incurred substantial expenditure on construction of factory building and in subsequent years the business of the assessee is being shown from that building. It is also assessee s submission that it had furnished the details of the construction expenses of factory building which has not been considered by CIT(A). Before us, Revenue has not placed any material on record to controvert the submissions of ld. A.R. We further find that there is no finding of ld. CIT(A) on the issue of incurring of expenses by assessee on the construction of factory building. In such a situation, we are of the view that the issue needs to be re-examined by ld. CIT(A). We, therefore, restore the issue to the file of ld. CIT(A) to decide the issue afresh after considering the submissions of assessee and in accordance with law. Needless to state that ld. CIT(A) will grant adequate opportunity of hearing to both the parties. Assessee is also directed to furnish promptly all the details called for by the authorites. Thus, the issue is set aside to the file of ld. CWT(A) without deciding the issue on merit. - Decided in favour of assessee for statistical purposes

Summary

Issues involved:
Levy of wealth tax on land purchased by the assessee.

Detailed Analysis:

1. Background of the Case:
The appeal was filed against the order of CIT(A)-1, Ahmedabad, for the assessment year 2008-09. The assessee, engaged in the business of pharmaceutical machineries, had tangible assets in the form of land and vehicles. The Assessing Officer (A.O.) noticed that the assessee had not filed its return of net wealth despite being required to do so.

2. AO's Findings and Assessment:
The A.O. issued notices under the Wealth Tax Act, and after assessment, computed the total net wealth of the assessee at ?2,02,58,687. The A.O. added the value of freehold land, ?1,74,23,087, to the net wealth, as the land was considered chargeable to wealth tax.

3. CIT(A) Decision:
The CIT(A) dismissed the appeal, upholding the A.O.'s decision. The CIT(A) considered the land as urban land liable for wealth tax, despite the assessee's argument that the land was used for industrial purposes and thus exempt from wealth tax.

4. Appellate Tribunal's Decision:
Before the Appellate Tribunal, the assessee reiterated that the land was purchased for constructing a factory building, and provided detailed evidence of construction activities. The Tribunal noted that the CIT(A) did not address the issue of construction expenses. Therefore, the Tribunal set aside the issue to the CIT(A) for re-examination and granted the assessee an opportunity to provide all necessary details.

5. Conclusion:
The Appellate Tribunal allowed the appeal for statistical purposes, directing the CIT(A) to re-examine the issue of wealth tax on the land purchased by the assessee. The Tribunal emphasized the need for a thorough review of the construction expenses and other relevant details before making a final decision.

In summary, the judgment revolved around the assessment of wealth tax on land purchased by the assessee for industrial purposes. The Tribunal highlighted the importance of considering all relevant evidence, including construction expenses, before determining the applicability of wealth tax.