2021 (2) TMI 47 - AT - Wealth-tax

Net wealth assessment - additions towards two assets within the definition of asset u/s. 2(ea)(1)(v) of the Act, which includes property at Saidapet and property at Haddows Road, Nungambakkam - claim of assessee before lower authorities that property at Saidapet is in the name of partnership firm, where the assessee is having 50% share and hence the same cannot be included in the net wealth of the assessee - HELD THAT - It is an admitted fact that once an asset is not in the name of the assessee, the same cannot be included in the definition of asset for the purpose of wealth tax. Valuation of interest of a person in a firm of which the assessee is a member shall be determined in the manner provided in Rule 16 and such value shall be added to the value of net asset as on the date of valuation. In this case, the AO has directly taken 50% value of property in the hands of the assesse without considering the prescribed method provided under Rule 16 for value of interest in partnership firm. Similarly, as regards property at Saidapet, although the assessee claims that the said property was used for her own business, but conceded the fact that property was never used for the purpose of business during the impugned assessment years. The only argument advanced by the learned AR for the assessee is value adopted by the Assessing Officer and according to him, value adopted by the Assessing Officer is on higher side. Schedule III (2) of Wealth Tax Act, 1957 provides for valuation of asset and how such value to be determined. Assessing Officer shall determine value of property in accordance with Schedule III. In this case, the Assessing Officer has adopted value declared by the assessee, without following the procedure provided under Schedule III. Considering the facts and circumstances of this case, are of the opinion that the appeals need to be set aside to the file of the Assessing Officer to redo the assessments in respect of above two properties and determine the value of interest in partnership firm in accordance with Rule 16 and value of Saidapet property in accordance with Part B of Schedule III to Wealth Tax Act, 1957.

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Reopening of assessment validity.
3. Inclusion of Saidapet property in net wealth.
4. Inclusion of Haddows Road property in net wealth.
5. Valuation of Rutland Gate property and related liabilities.
6. Additions of cars and cash balance to net wealth.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The assessee's appeal was delayed by 10 days. The delay was attributed to the authorized representative being out of station. The tribunal found the reasons provided by the assessee to be reasonable and condoned the delay, allowing the appeals to be admitted for adjudication.

2. Reopening of Assessment Validity:
The assessee challenged the reopening of the assessment on the grounds of invalidity. However, the tribunal did not provide a detailed analysis on this issue within the provided text, implying that the reopening was considered valid for the purposes of the appeal.

3. Inclusion of Saidapet Property in Net Wealth:
The assessee argued that the Saidapet property was owned by a partnership firm (M/s Venkateshwara Combines) and used for business purposes, thus should not be included in her net wealth. The tribunal noted that the property was indeed in the name of the partnership firm. However, since the firm did not carry out any business, it was not considered a commercial establishment eligible for exemption under section 2(ea)(1)(v) of the Wealth Tax Act. The tribunal directed the Assessing Officer to re-assess the value of the assessee's interest in the partnership firm as per Rule 16 and determine the property's value per Schedule III.

4. Inclusion of Haddows Road Property in Net Wealth:
The assessee claimed that the Haddows Road property was used for her business purposes and should be exempt from wealth tax. The tribunal found that the assessee failed to provide evidence supporting the property's use for business purposes. Consequently, the property could not be excluded from the definition of assets for wealth tax purposes. The tribunal upheld the inclusion of the Haddows Road property in the net wealth but directed the Assessing Officer to reassess the property's value according to the prescribed methods.

5. Valuation of Rutland Gate Property and Related Liabilities:
The assessee contended that the liabilities related to the Rutland Gate property, acquired through loans, should be deducted from the net wealth. The tribunal agreed, noting that the loans were accepted as genuine in income tax proceedings. The Assessing Officer was directed to deduct these liabilities from the net wealth for wealth tax purposes.

6. Additions of Cars and Cash Balance to Net Wealth:
The assessee argued that the cars and cash balance were already included in the net wealth declared in the returns filed under section 14 of the Act. The tribunal accepted this argument and deleted the additions made by the Assessing Officer for these items.

Conclusion:
The appeals were allowed for statistical purposes, directing the Assessing Officer to redo the assessments for the Saidapet and Haddows Road properties, determine the value of the assessee's interest in the partnership firm per Rule 16, and reassess the properties' values according to Schedule III. The tribunal also directed the deduction of liabilities related to the Rutland Gate property and deleted the additions for cars and cash balance.

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