2018 (7) TMI 144 - AT - Wealth-tax

Wealth tax assessment - Agriculture Land / stock-in-trade - AO brought the same to section 2(ea)(b) of the Wealth Tax Act on the ground that the land was converted into non-agricultural land - Held that - CWT(A) himself accepted that the land has already been converted into non-agricultural and the same has shown as stock-in-trade. Once assessee has treated the land which is in dispute is stock-in-trade, it has to be treated as business asset. Simply because assessee is not offered income from real estate, nature of the asset cannot be changed. Therefore, we allow this ground of appeal raised by the assessee. House site at Tenali to the extent of 1400 sq.ft. - Held that - he assessee has valued the property at ₹ 11.50 lakhs. The Assessing Officer has adopted the market value, based on the SRO s value of ₹ 34,02,000/-. On appeal, ld. CWT(A) confirmed the order of the Assessing Officer. Before us, the assessee has not brought any material on record to show that why SRO value adopted by the Assessing Officer is not correct. Therefore, we find no infirmity in the order passed by the ld. CWT(A). Ground of appeal raised by the assessee is dismissed. Land to the extent of 2.08 acres at Kalakkal, Medak District - assessee claimed it as an agricultural land and sought exemption - Held that - In this case, Assessing Officer has not examined whether the land is an agricultural land or not. The assessee also failed to produce the relevant material before the Assessing Officer in this regard. Insofar as non-conversion of agricultural land is concerned, this aspect is not considered by the Assessing Officer. Under these facts and circumstances of the case, we are of the opinion that the entire issue involved in this appeal has to be re-examined after considering the relevant material. Therefore, we set aside the order passed by the ld.CWT(A) and remit the matter back to the file of the Assessing Officer to adjudicate this again Flat situated at Chandanagar - Market value assessment - assessee contended before the Assessing Officer that the said flat was let out for 300 days and the same is exempt under section 5 & 6 of the Wealth Tax Act - Held that - CWT(A) scaled down the market value of rent at 5,000/- per sq.yard in relation to structure and directed the Assessing Officer to value the same at ₹ 14,40,000/-. Both the Assessing Officer and the ld. CIT(A) have not considered the submissions made by the assessee with regard to exemption claimed under section 5 & 6 of the Wealth Tax Act. The assessee contends that once the property was let out for more than 300 days, the Revenue without examining the fact, brought to tax the value of the asset. Therefore, we deem it fit to send the issue back to the file of the Assessing Officer to verify the facts

Issues Involved:
1. Valuation of land at Nagaram.
2. Valuation of house site at Tenali.
3. Classification of land at Kalakkal, Medak District.
4. Classification of land at Nizampatnam.
5. Classification of land at Kothapet.
6. Valuation of flat at Chandanagar.

Issue-wise Detailed Analysis:

1. Valuation of Land at Nagaram:
The primary issue was whether the land at Nagaram, measuring 1.09 acres, should be treated as a business asset or subjected to wealth tax. The Assessing Officer valued the land at ?14,86,700/- and brought it under section 2(ea)(b) of the Wealth Tax Act, considering it non-agricultural. The Commissioner of Wealth Tax (Appeals) [CWT(A)] confirmed this, noting no income was offered under the head business. However, the Tribunal held that once the land is treated as stock-in-trade, it must be considered a business asset, irrespective of whether income was offered. Thus, the appeal on this ground was allowed.

2. Valuation of House Site at Tenali:
The dispute centered on the valuation of a house site at Tenali, measuring 1400 sq.ft. The assessee valued it at ?11.50 lakhs, while the Assessing Officer adopted the market value of ?34,02,000/- based on SRO’s value. The CWT(A) confirmed the Assessing Officer's valuation. The Tribunal found no infirmity in the CWT(A)'s order as the assessee failed to provide contrary evidence. Hence, this ground of appeal was dismissed.

3. Classification of Land at Kalakkal, Medak District:
The land at Kalakkal, measuring 2.08 acres, was claimed as agricultural land by the assessee, valued at ?8,88,549/-. The Assessing Officer, however, valued it at ?16,64,000/- based on SRO rates and included it under wealth tax. The assessee argued that the land was agricultural and exempt under section 2(ea) of the Wealth Tax Act, as per the retrospective amendment in the Finance Act, 2013. The Tribunal noted that the Assessing Officer did not examine whether the land was agricultural and remitted the matter back for re-examination, directing the assessee to provide relevant details. This ground was allowed for statistical purposes.

4. Classification of Land at Nizampatnam:
The assessee claimed the land at Nizampatnam, measuring 13.61 cents, as agricultural land. The Assessing Officer included it under wealth tax due to lack of evidence proving its agricultural status. The Tribunal, following the reasoning for the Kalakkal land, remanded the issue back to the Assessing Officer for fresh consideration, directing the assessee to provide necessary documentation. This ground was allowed for statistical purposes.

5. Classification of Land at Kothapet:
Similar to the Nizampatnam land, the issue was whether the land at Kothapet, measuring 12.39 cents, was agricultural. The Tribunal remanded this issue back to the Assessing Officer for fresh consideration, consistent with its decision on the Kalakkal land. This ground was allowed for statistical purposes.

6. Valuation of Flat at Chandanagar:
The dispute involved the valuation of a flat at Chandanagar. The Assessing Officer valued it at ?17,31,000/- and calculated rental income based on market value. The assessee contended that the flat was let out for 300 days and exempt under sections 5 & 6 of the Wealth Tax Act. The CWT(A) adjusted the market value but did not consider the exemption claim. The Tribunal remanded the issue back to the Assessing Officer to verify the facts and decide on merits, considering the assessee’s submissions. This ground was set aside for fresh consideration.

Additional Grounds:
Several grounds were dismissed as general in nature or not pressed by the assessee. Specific grounds related to the valuation and classification of various lands were adjudicated based on the Tribunal's decisions in related cases.

Conclusion:
The appeals were partly allowed for statistical purposes, with several issues remanded back to the Assessing Officer for fresh consideration based on detailed examination and relevant documentation. The Tribunal emphasized the need for thorough verification of facts and adherence to legal provisions.

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