2017 (11) TMI 216 - AT - Wealth-tax

Valuation of asset for the purpose of Wealth Tax - valuation at value as per Govt Approved Valuer s report filed for obtaining loan from bank or the value shown by the appellant in the returns of wealth on the basis of value of the property for stamp duty purpose - Held that - The perusal of Form No.E filed before the CWT(A) reflects that the issue raised by the assessee was against the order of WTO in making addition of ₹ 27,62,680/- to the net wealth of assessee and further in not giving exemption under section 5(1)(vi) of the Act. However, the CWT(A) decided the issue on a ground which was not raised before him i.e. in holding that the value of loan against assets pledged with bank for obtaining loan was deductible under section 2(m) of the Act. No such issue was raised before the CWT(A). The issue which needs to be adjudicated by the CWT(A) was the valuation of property. We direct the CWT(A) to decide the issue raised before him i.e. the valuation of asset in accordance with the law. The issue of deduction under section 2(m) of the Act was never pleaded or raised by the assessee and hence, there is no merit in the order of CWT(A) in this regard. Accordingly, allowing the claim of assessee raised by way of an application under Rule 27 of the ITAT Tribunal Rules, we remit this issue back to the file of CWT(A). The grounds of appeal raised by the Revenue are allowed for statistical purposes.

Summary

Issues Involved:
- Valuation of property for Wealth Tax purposes
- Deduction under section 2(m) of the Wealth Tax Act

Analysis:

1. Valuation of Property for Wealth Tax Purposes:
The appeals filed by the Revenue were against the consolidated order of the CWT(A)-2, Nashik, regarding assessment years 2005-06 to 2009-10 under section 16(3) r.w.s. 17 of the Wealth Tax Act, 1957. The primary contention raised by the Revenue was related to the valuation of property owned by the assessee in Jalgaon. The Assessing Officer initiated proceedings based on a valuation report by a Government Approved Valuer, which valued the property higher than what the assessee had declared. The assessee argued that the higher valuation was due to pledging the property as collateral security for a loan by a company, and the market value was lower. The CWT(A) upheld the addition made by the Assessing Officer but allowed deduction under section 2(m) of the Act for the value of assets pledged. The Revenue challenged this decision, leading to the appeal.

2. Deduction under Section 2(m) of the Wealth Tax Act:
The CWT(A) considered the issue of whether the value of assets pledged by the assessee for obtaining a loan should be deductible under section 2(m) of the Act. The assessee contended that since the loan was obtained by pledging the assets, the loan liability should be allowed as a deduction. The CWT(A) agreed with the assessee and deleted the addition made by the Assessing Officer. However, the Revenue disputed this decision, arguing that the debt was availed by the company, not the assessee, and cited precedents to support their stance. The Tribunal analyzed the contentions of both parties and concluded that the issue of deduction under section 2(m) was not raised before the CWT(A) and directed a reevaluation of the valuation issue. The Tribunal set aside the CWT(A)'s decision on deduction and remitted the matter back for reconsideration.

In conclusion, the Tribunal allowed the appeals of the Revenue for statistical purposes and granted the applications under Rule 27 of the ITAT Tribunal Rules filed by the assessee. The judgment emphasized the need for a proper adjudication of the valuation issue in accordance with the law and highlighted the importance of raising relevant issues before the appropriate authorities for consideration.