2019 (9) TMI 416 - AT - Wealth-tax

Wealth tax assessment - asset to fall within the ambit of taxable asset - whether the land being Khasra No. 335, Village Bandwahi, Gurgaon admeasuring 21.65 acres is a taxable asset for the purpose of wealth tax or not ? - HELD THAT - Here in this case, the first exception that the land has been classified as agricultural land in the records of the Government and is used for the agricultural purposes will not apply as assessee himself has contended that it was a non agricultural and uncultivable land being (Gair Mumkin Pahar). Now the only condition left which is required to be examined, whether any construction of a building is permissible under any law for the time being in force the area in which land is situated. If it is ascertained that construction of a building is permissible, then ostensibly it will be held as taxable asset for the purpose of imposing wealth tax. However, if construction of a building is not permissible, then it shall be outside the scope of taxable asset. In view of the aforesaid position of law, we are of the opinion that this matter needs to be sent back to the file of the AO, who shall seek clarification from the Government authorities or the local authority as to whether the construction is permissible by any law in force on the land in which this asset is situated. Assessee will also try to obtain necessary certificates/Records from the authorities in this regard and cooperate with the AO and if it is found to be a waste land where construction is not permitted, then it should be removed from taxable asset. With this direction appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Imposition of wealth tax on non-urban land.
2. Addition to net wealth based on circle rate.
3. Charging of interest under Wealth Tax Act.

Analysis:

Issue 1: Imposition of wealth tax on non-urban land
The appellant challenged the imposition of wealth tax on a non-urban land of 21.65 acres situated at a specific location. The Assessing Officer (AO) determined the value of the land based on the circle rate, leading to a significant addition to the net wealth of the assessee. The appellant argued that the land was uncultivable waste land, not suitable for agricultural, industrial, or residential purposes. The appellant contended that the land did not fall under the definition of taxable asset for wealth tax purposes. The appellant cited relevant statutory provisions and definitions to support their claim. The Commissioner of Income Tax (Appeals) considered the arguments and evidence presented by both parties. After thorough examination, it was decided that the matter required further clarification regarding the permissibility of construction on the land as per existing laws. The case was remanded back to the AO for necessary verification and assessment. The appellant was instructed to cooperate in obtaining relevant certificates and records for clarification. The appeal was allowed for statistical purposes.

Issue 2: Addition to net wealth based on circle rate
The AO had added a substantial amount to the net wealth of the assessee based on the circle rate of the land. The appellant contested this addition, emphasizing that the land was not fit for sale or any productive use, thus challenging the valuation method adopted by the AO. The Commissioner analyzed the contentions of both parties and considered the valuation report submitted by the Departmental Valuation Officer (DVO). After detailed scrutiny, it was determined that the value of the land should be revised based on the DVO's assessment rather than the circle rate applied by the AO. The value was adjusted significantly lower than the initial assessment, taking into account the nature and usability of the land. The appellant's objections were upheld, and the value of the land for wealth tax purposes was revised accordingly.

Issue 3: Charging of interest under Wealth Tax Act
The appellant raised concerns regarding the charging of interest under the Wealth Tax Act by the AO. The appellant argued that the imposition of interest was unjustified and contrary to the provisions of the Act. However, the specific details and reasoning behind the imposition of interest were not elaborated upon in the summary provided. The judgment did not explicitly address the issue of interest charges under the Wealth Tax Act, focusing primarily on the valuation and classification of the land for wealth tax purposes.

In conclusion, the appellate tribunal's judgment addressed the key issues raised by the appellant regarding the imposition of wealth tax on non-urban land, addition to net wealth based on circle rate, and the charging of interest under the Wealth Tax Act. The decision provided detailed analysis, legal interpretations, and directives for further assessment, ultimately allowing the appeal for statistical purposes based on the need for additional verification and clarification regarding the land's classification and valuation for wealth tax purposes.