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2018 (6) TMI 1331 - AT - Wealth-taxWealth escaped assessment - whether department should not have assessed the capital gains for AY. 2007-08 on the reason that possession was handed over on 01-04-2006 - Held that - We are of the opinion that the order of AO and CIT(A) cannot be sustained. It was the contention of the AO in Income Tax proceedings that assessee had indeed handed over the possession of the property as on 01-04-2006, which led to assessing the capital gains arising on the transfer of that property in AY. 2007-08. Therefore, as on 31-03-2007, the property was no longer in the possession or ownership of assessee. Moreover, if the property is deemed to be in assessee s ownership, then, the money received towards sale would have to be considered as liability on the date of valuation. There cannot be a Wealth Tax arising in this transaction. The orders of AO and CIT(A) are against the principles of law and facts of the case. Accordingly, we have no hesitation in setting aside the orders by allowing the grounds of assessee.
Issues involved:
1. Assessment under the Wealth Tax Act based on possession and ownership of property. 2. Discrepancy in assessing capital gains and wealth tax on the same property for different assessment years. Analysis: Issue 1: Assessment under the Wealth Tax Act based on possession and ownership of property The case involved a dispute regarding the assessment of wealth tax on a property owned by the assessee. The Assessing Officer (AO) issued notices for Wealth Tax Return based on the property's ownership status as of 31-03-2007, despite the property being sold earlier, and capital gains being offered for the Assessment Year 2007-08. The AO contended that since the property was registered in 2008, the ownership still resided with the assessee. However, the assessee argued that the property had been sold, consideration received, and capital gains assessed for the relevant assessment year. The Commissioner of Income Tax (Appeals) upheld the AO's decision, stating that possession was not transferred in the previous financial year. The ITAT disagreed with this assessment, noting that the property had been transferred earlier, and the capital gains had already been assessed for the relevant year. The ITAT concluded that the property was no longer in the possession or ownership of the assessee as of 31-03-2007, and there was no basis for levying wealth tax on the same property. Issue 2: Discrepancy in assessing capital gains and wealth tax on the same property for different assessment years The dispute also highlighted a discrepancy in the assessment of capital gains and wealth tax on the same property for different assessment years. The AO had assessed capital gains for the Assessment Year 2007-08 based on the transfer of possession in 2006. However, for the Wealth Tax assessment, the AO considered the property as still owned by the assessee as of 31-03-2007. This conflicting stance between the Income Tax and Wealth Tax proceedings raised questions about the consistency and coherence in the assessment process. The ITAT noted this contradiction and emphasized that if the property was deemed to be in the assessee's ownership, the consideration received towards the sale would have to be considered as a liability, negating the basis for levying Wealth Tax. The ITAT concluded that the orders of the AO and CIT(A) were not in line with legal principles and factual circumstances, ultimately allowing the appeal of the assessee and setting aside the previous orders. In conclusion, the ITAT's judgment clarified the ownership and possession status of the property in question, highlighting the importance of consistency in assessing taxes on the same property for different assessment years. The decision provided a clear interpretation of the law and factual context, ultimately ruling in favor of the assessee and overturning the previous assessments under the Wealth Tax Act.
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