2020 (3) TMI 580 - AT - Wealth-tax

Net taxable wealth - Assessment of net taxable wealth on the immovable property - share of flat at Khairatabad - HELD THAT - It is not in disputed that the house was not under repair. In these circumstances, it cannot be presumed that the house is habitable. In such situation, it cannot be treated as a residential property in the true sense. Further, the Ld. WTO has adopted the market value on estimate basis without any supporting evidence which is not justifiable. Considering the above facts of the issue, we are of the considered view that the aforesaid residential house cannot be treated as an asset exigible for wealth tax. However, only the undivided share in the land attributable to the residential flat shall be exigible for wealth tax which the Ld. WTO shall estimate after obtaining the value from the Stamp Valuation Authority of the State Government and by considering all the relevant factors and thereafter arrive at the taxable wealth. It is ordered accordingly. share of land at Jubilee Hills - We are of the considered view that the ad-hoc estimate of the market value of the immovable asset is not justifiable. Further, the unfinished building cannot be treated as a building exigible to wealth tax. However, the urban land is exigible to wealth tax as per section 2(ea)(v) of the Act. Accordingly, the Ld. WTO is hereby directed to obtain the market value of the land from the Stamp Valuation Authority of the state Government for the relevant assessment year and after considering all the relevant factors estimate and adopt the same for computing the taxable wealth of the assessee. Land at Kapra - Assessee had intimated to the Ld. WTO that the land purchased along with others were for the purpose of the business viz., construction of flats which are to be subsequently sold and therefore it should be treated as stock in trade. Further the assessee had also conducted in such a manner so as to establish that the land was purchased for the purpose of business by obtaining permission for construction from GHMC. In such situation, merely because the permission for granting construction from GHMC was applied on 25/7/2009 it is not appropriate to treat the urban land as asset U/s. 2(ea)(i)(v) of the Act because the moment the land is purchased for trading it has to be treated as stock-in-trade and section 2(ea)(i)(2) vividly exempts stock in trade within the purview of assets for the purpose of computing taxable wealth. Hence, we do not subscribe to the view of the Ld.WTO. Accordingly, we hereby direct the Ld. WTO to exclude the land at Kapra for the purpose of determining the taxable wealth of the assessee. Land at Katedan - Assessee should be provided with one more opportunity to justify his claim with cogent evident before the Ld. WTO. Accordingly, we hereby remit back the matter to the file of Ld. WTO for de novo consideration on the issue. Land at L.B. Naga - We are of the considered view that the assessee should be provided with one more opportunity to justify his claim with cogent evident before the Ld. WTO on this issue also. Accordingly, we hereby remit back this issue to the file of Ld. WTO for de novo consideration. Motor Car - On perusing the issue, we are of the view that the Ld. WTO has rightly assed the motor car to wealth tax because neither the assessee is in the business of running motor car nor hiring them. Further the motor car is not held by the assessee as stock in trade. Therefore, we do not find any infirmity in the order of the Ld. WTO on this issue.

Summary

Issues:
Assessment of net taxable wealth on immovable property under Wealth Tax Act, 1957 for AY 2009-10.

Analysis:
1. Half share of flat at Khairatabad:
The assessee claimed the property was under repair and not habitable during the relevant AY. The Ld. WTO estimated its value at ?17,20,000. The ITAT disagreed, stating the house not being habitable cannot be treated as residential property. Only the undivided share in the land should be considered for wealth tax after valuation by the State Stamp Valuation Authority.

2. Quarter share of land at Jubilee Hills:
The construction on the land was incomplete, but the Ld. WTO valued it at ?51,33,000. The ITAT found the ad-hoc estimate unjustifiable, directing valuation of urban land by the State Stamp Valuation Authority for wealth tax purposes.

3. Land at Kapra:
The urban land was jointly owned for flat construction, with permission pending. The Ld. WTO valued it at ?69,25,000, considering it as an asset. However, the ITAT disagreed, stating it should be treated as stock in trade and not taxable wealth, directing exclusion from assessment.

4. Land at Katedan:
The commercial property was included in taxable wealth without justification. The ITAT remitted the matter for the assessee to provide evidence justifying exclusion before the Ld. WTO.

5. Land at L.B. Nagar:
The commercial building on the land was rented out, but the Ld. WTO included its value in taxable wealth. The ITAT remitted the issue for the assessee to provide evidence justifying exclusion before the Ld. WTO.

6. Motor Car:
The motor car was assessed for wealth tax, as it was not used for business or held as stock in trade. The ITAT upheld the Ld. WTO's decision on this issue.

The ITAT set aside the Ld. CWT (A)'s order, partly allowing the appeal and remitting the matter back to the Ld. WTO for reassessment based on the directions provided.