2018 (1) TMI 1250 - HC - Wealth-tax

Correct fair market value of the property as on the relevant valuation date - value declared by assessee - Held that - As decided in CIT Vs. Akshay Textiles and Agencies Pvt. Ltd. 2007 (10) TMI 251 - BOMBAY HIGH COURT annual letting value has to be determined on basis of annual rent received by the assessee and not what has been received by its tenants from the ultimate users. The emphasis placed upon expression rent received or receivables in explanation (2) to Rule 5 ought not to be given wide interpretation as is sought to be urged. For these reasons, the first question of law framed is answered against the Revenue and in favour of the assessee. Valuation of the Mercedes Benz Car - whether value of the Mercedes Benz Car could not be included in the net wealth of the Assessee? - Held that - As held on facts that though the Mercedes Car was held by the assessee in his name, it was in fact funded and maintained by his Foreign Principal, on whose behalf it was held by him. The foreign principal did not have any office or branch in India. The ITAT had taken note of all these facts and vide it its order dated 5.11.2011 for a previous year deleted a similar inclusion of the value of the car. This reasoning persuaded the ITAT in the facts of the present case for the current Assessment Year to direct the deletion of such value. Being concurrent findings of facts and having regard to the circumstances that the car was funded by the assessee s foreign principal and apparently also maintained on its behalf, the question of law is answered in favour of the assessee

Summary

Issues:
1. Valuation of property for Wealth Tax assessment.
2. Inclusion of Mercedes Benz Car in net wealth calculation.

Issue 1 - Valuation of Property:
The case involved a dispute over the valuation of a property for Wealth Tax assessment. The Wealth Tax Officer (WTO) assessed the property's value significantly higher than the value declared by the assessee. The dispute centered around the rental income and deposits related to the property. The assessee argued that the higher valuation was unjustified as they had received only a nominal amount compared to the assessed value. The CIT(A) upheld the higher valuation, leading to an appeal to the ITAT. The ITAT, citing a Calcutta High Court decision, ruled in favor of the assessee, emphasizing the interpretation of "rent received or receivable" under Wealth Tax Rules. The Court agreed with the ITAT's interpretation, rejecting the Revenue's broader interpretation and ruling in favor of the assessee.

Issue 2 - Inclusion of Mercedes Benz Car:
The second issue revolved around the inclusion of a Mercedes Benz Car in the assessee's net wealth calculation. The CIT(A) and ITAT both found that the car, although registered in the assessee's name, was funded and maintained by a foreign principal on whose behalf it was held. Considering past decisions and the funding arrangement, the ITAT directed the exclusion of the car's value from the net wealth calculation for the current assessment year. The Court upheld this decision, citing concurrent findings of fact and the foreign principal's involvement in funding and maintaining the car. Consequently, the question of law was resolved in favor of the assessee.

In conclusion, the Court dismissed the appeal, upholding the ITAT's decisions on both issues. The valuation of the property and the inclusion of the Mercedes Benz Car in the net wealth calculation were resolved in favor of the assessee based on the specific circumstances and legal interpretations presented during the proceedings.