2018 (5) TMI 2 - HC - Wealth-tax

Determining the market value of the property under wealth Tax - whether only actual rent received should be taken without including the charges collected separately towards service and maintenance? - whether amenities do not form part of the rent for the purpose of valuing the property under Wealth Tax Act? - Held that - On a perusal of the materials placed before this Court, we are prima facie satisfied that both the Appellate Authority as well as the ITAT have gone by the orders in the assessee s own case for the earlier AY 1984-1985 and 1985-86, where, the present re-framed substantial questions of law were not the issue in those years. For such reasons, we are convinced that the matter should be remanded to the CWT (A) for fresh consideration on merits and in accordance with law. Tax Case Appeal is allowed, the impugned order is set aside, and the matter is remanded to the CWT (A) for fresh consideration to decide the following two issues along with the facts and circumstances of the case after notice to the assessee - i) Whether for the purpose of determining the market value of the property under wealth Tax only actual rent received should be taken without including the charges collected separately towards service and maintenance? ii) Whether amenities do not form part of the rent for the purpose of valuing the property under Wealth Tax Act?

Summary

Issues: Framing of substantial questions of law for consideration, interpretation of Wealth Tax Act regarding valuation of property.

Analysis:
1. Framing of Substantial Questions of Law: Initially, a substantial question of law was framed for consideration regarding the exclusion of the value of a theater complex as exempt under Section 40(3)(vi) of the Finance Act, 1983. However, the Senior Standing Counsel for the appellant argued that a mistake occurred before the Commissioner of Wealth Tax (Appeals-I) and the Income Tax Appellate Tribunal (ITAT) in framing this question. Consequently, two new substantial questions of law were raised, focusing on the market value of property under the Wealth Tax Act. The Court acknowledged this argument and re-framed the issues for consideration.

2. Interpretation of Wealth Tax Act: The assessment under the Wealth Tax Act was completed by the respondent, with the issue revolving around whether amenities should be considered part of the rent for valuing the property under the rent capitalization method. The Commissioner of Wealth Tax (Appeals) partially allowed the assessee's appeal, following a previous ITAT order. The Revenue appealed to the ITAT, contesting the exclusion of charges for amenities from the rent valuation. The ITAT dismissed the Revenue's appeal, citing a previous ruling against the Revenue in the assessee's case for an earlier assessment year. The Senior Standing Counsel highlighted that the re-framed substantial questions of law had not been considered by the lower authorities and requested a remand for fresh consideration.

3. Court's Decision: Upon reviewing the case materials, the Court found that the Appellate Authority and the ITAT had relied on previous orders that did not address the re-framed substantial questions of law. Consequently, the Court decided to remand the matter to the Commissioner of Wealth Tax (Appeals) for fresh consideration on the two re-framed issues. The Tax Case Appeal was allowed, the previous order was set aside, and the matter was remanded for a fresh decision after considering the specified issues. The Court emphasized that the re-framed questions should be the subject of fresh consideration by the Commissioner of Wealth Tax (Appeals) in accordance with the law.