2022 (9) TMI 616 - AT - Wealth-tax

Wealth tax assessment - Nature of land sold - Valuation of land - Joint ownership - HELD THAT - As property was held in joint names, however, for all practical purposes, the assessee was the sole owner of the property. All the other joint owners were former employee having no source of income. In fact, the assessee himself claimed Long Term Capital Loss on entire property while filing its Income Tax Returns. The same was also affirmed by the assessee in sworn statement which was never retracted. Even before constitutional authority, the assessee was declared to be the sole owner of the land. All these circumstantial evidences would show that the assessee was the sole owner of the land and other co-owners were namesake owners to avoid the provisions of Land Ceiling Act. Therefore, we find no infirmity in the impugned order on this issue. Plea that the asset is not a land but building is also without any cogent evidence on record. Except for mere submission, there is nothing on record which would suggest that the assessee constructed building on this land. This plea was raised for the first time during appellate proceedings. However, the submissions were not supported by any material evidence. No plausible material has been produced before us also to substantiate this fact. Therefore, this plea of the assessee has also been rightly rejected by Ld. CIT(A). Valuation of land - The extant rule required the assessee to value the land on valuation rate which the property would fetch if sold in the open market. CIT(A) has directed Ld. AO to considered year-on-year appreciation of 10%. We are of the considered opinion that considering the given factual matrix, this rate is on the lower side. Therefore, we direct Ld. AO to directed to adopt appreciation rate of 20% on year-on-year basis and recompute the value of the land. This ground stand partly allowed from AYs 2001-02 to 2004- 05 whereas this ground stand dismissed for AY 2005-06. Debt Owed denied as the assessee could not produce any evidence to substantiate that the same were in respect of assets as included in taxable wealth - The onus to prove the nexus of liabilities with the taxable wealth could not be discharged by the assessee. No new material has been placed before us to establish this nexus. Therefore, no relief could be granted to the assessee on this score. The grounds stand dismissed for all the years. Computation of interest is concerned, it would be suffice to direct Ld. AO to compute correct interest in accordance with law. This ground stand allowed for statistical purposes for all the years.

Summary

Issues:
Appeal against Wealth Tax assessment orders for AYs 2001-02 to 2007-08; Dispute over addition to wealth, valuation of property, deduction of debts owed, and computation of interest.

Analysis:

Property at Natesan Nagar:
The assessee claimed that the property was used for business and only 1/5th share should be assessed for wealth tax. However, the CIT(A) determined the assessee as the sole owner based on evidence. The valuation was contested, but the CIT(A) upheld it. The Tribunal directed a higher appreciation rate for land valuation, dismissing the claim that the property was a building without evidence.

Deduction of Debts Owed:
The CIT(A) denied the deduction due to lack of evidence linking debts to taxable wealth. The Tribunal upheld this decision as the assessee failed to establish the nexus between liabilities and taxable wealth.

Computation of Interest:
The Tribunal directed the AO to compute interest correctly, allowing the ground for statistical purposes.

In conclusion, the appeals were partly allowed based on the Tribunal's orders, pronounced on August 5, 2022.