2018 (2) TMI 63 - HC - Wealth-tax

Determination of net wealth - correctness of valuation adopted by the AO - Scope of remand by the ITAT to the WTO - Held that - Remand by the ITAT to the WTO in this case was with respect to the question of valuation. At the stage when the WTO decided on the valuation, the final report of the DVO was not available. In the circumstances, the ITAT remanded the matter only on that aspect. In the circumstances, the findings rendered by the WTO could not have been interfered with by the CWT who entertained the issue of taxability which had been earlier given-up. Para 28 of the ITAT s order clearly shows that the scope of remand was clearly in respect of valuation. In these given facts, the circumstance that for later years, the Revenue accepted the ITAT s contentions regarding non-taxability of assets, per se cannot afford a ground for it to insist that the remand made by the ITAT ought to and was enlarged so as to include that ground in the previous order when as a matter of fact they did not agitate it. ITAT s impugned order on the first question did not call for interference. The Court further notices that both the ITAT and the lower appellate authority, i.e. CWT did not address themselves to the issue of valuation which primarily was the subject matter of remand in the first instance. In the circumstances, the matter is remitted for fresh consideration

Summary

Issues:
1. Whether the Income Tax Appellate Tribunal was correct in law in holding that the assets were not includable in the net wealth of the assessee?
2. Whether the Income Tax Appellate Tribunal was correct in law in upholding the value adopted by the Deputy Commissioner of Wealth Tax for the land situated at different locations?

Analysis:

Issue 1:
The case involved four appeals where the core issue was the inclusion of two immovable properties in the net wealth of the appellants. The Wealth Tax Officer included the value of these properties for assessment years 1993-94 and 1994-95. The Commissioner of Wealth Tax rejected the assessees' contentions, leading to an appeal to the Income Tax Appellate Tribunal (ITAT). The ITAT remanded the matter for fresh consideration on the valuation of the properties. The appellants contended that the properties were not urban land as no construction was permissible on them, citing provisions of the Wealth Tax Act. The ITAT, however, ruled that the remand order was limited to valuation and not taxability, leading to the ITAT accepting the Revenue's appeal. The court emphasized that the scope of remand was solely on valuation, and the question of taxability had been previously addressed and decided against the assessees. Therefore, the ITAT's order on taxability did not warrant interference.

Issue 2:
Regarding the valuation of the properties, the Appellate Officer valued the properties based on submissions and set values for each location. The assessees raised concerns about the land's classification as urban land, arguing that no construction was permissible as per the law. The Commissioner of Wealth Tax granted the relief claimed by the assessees, but the ITAT, focusing on the limited scope of the remand order, ruled in favor of the Revenue. The court observed that both the ITAT and the lower appellate authority did not address the valuation issue, which was the primary subject of remand. Consequently, the matter was remitted for fresh consideration by the Commissioner of Wealth Tax, with the appeals being partly allowed solely on the issue of valuation.

In conclusion, the judgment highlighted the importance of adhering to the scope of remand orders and reiterated that the ITAT's remand was limited to valuation, not taxability. The court emphasized the need for a focused consideration of issues and directed a fresh evaluation by the Commissioner of Wealth Tax solely on the matter of valuation.