2023 (1) TMI 1037 - AT - Wealth-tax

Exigibility of 'Urban Land' to wealth tax - wealth Tax Officer considering the property situated at Radha Realtors, which was under construction, as asset within the meaning of section 2(ea) of the Wealth Tax Act. HELD THAT - As assessee fairly conceded that the ground is decided against the assessee by the decision of the Hon'ble Supreme Court in the case of Giridhar G.Yadalam v. CWT . 2016 (1) TMI 826 - SUPREME COURT Accordingly, the ground of appeal No.1 raised by the assessee is dismissed. Taxability of the entire land for the purpose of wealth tax - HELD THAT - We find the AO in the instant case valued the entire land of 1 Acre.03 guntas at Rs.1,40,02,927/- as the value of the asset for the year under consideration. It is the submission of assessee that in view of the decision in the case of Potla Nageswara Rao 2014 (8) TMI 636 - ANDHRA PRADESH HIGH COURT for the purpose of arriving at the value of the land in question, the land that was transferred pursuant to the development agreement cannot be taken into consideration in the hands of the assessee as there is a transfer within the meaning of section 2(47) r.w.s. 45 of the Act and only the value of the land that has been retained by the assessee of 1067 sq. yards valued at Rs.29,73,920/- can be considered for the purpose of net wealth. Since the lower authorities have not considered the applicability of the decision of the Hon'ble jurisdictional High Court cited(Supra), therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to adjudicate the issue afresh regarding the value of the land in question that has been retained by the assessee and the portion of the land that has been given to the Developers as per the Jt. Development Agreement. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee

Summary

Issues Involved:
1. Delay in filing of appeals.
2. Taxability of property under construction as an asset under Section 2(ea) of the Wealth Tax Act.
3. Valuation of land transferred under a development agreement for wealth tax purposes.

Detailed Analysis:

1. Delay in Filing of Appeals:
The assessee filed five appeals with a delay of three days. The assessee submitted a condonation application with an affidavit explaining the reasons for the delay. After considering the contents of the application and hearing both sides, the Tribunal condoned the delay and admitted the appeals for adjudication.

2. Taxability of Property Under Construction:
The primary issue was whether the property under construction, named Radha Realtors, could be considered an asset under Section 2(ea) of the Wealth Tax Act. The Assessing Officer valued the property at Rs.1,40,02,972/- and included it in the total wealth of the assessee. The CWT(A) sustained this addition, referencing the Supreme Court's decision in Giridhar G. Yadalam v. CWT (2016) 384 ITR 52 (SC), which held that only fully constructed buildings are excluded from the definition of "urban land" under Section 2(ea). The Tribunal upheld this view, dismissing the first ground of appeal raised by the assessee, as it was consistent with the Supreme Court's ruling.

3. Valuation of Land Transferred Under Development Agreement:
The assessee argued that the entire value of the land could not be considered as an asset since a portion of it was transferred to a developer under a development agreement. The assessee retained only 1,067 sq. yards of the total land, and thus, the value should be proportionately reduced to Rs.29,73,920/-. The Tribunal noted that this alternate ground was not raised before the Assessing Officer or the CWT(A). However, considering the jurisdictional High Court's decision in Sri Potla Nageswara Rao (2014) 365 ITR 249 (AP), which held that land transferred under a development agreement constitutes a transfer under Section 2(47) r.w.s. 45 of the Act, the Tribunal found merit in the assessee's argument. Consequently, the Tribunal restored the issue to the Assessing Officer to re-evaluate the value of the land retained by the assessee and the portion transferred to the developer, in accordance with the High Court's decision. The second ground was allowed for statistical purposes.

Conclusion:
The Tribunal dismissed the first ground of appeal regarding the taxability of the property under construction but allowed the second ground for statistical purposes, directing a re-evaluation of the land's value by the Assessing Officer. The identical grounds in the remaining appeals were similarly adjudicated, leading to a partial allowance of all appeals for statistical purposes. The order was pronounced in the Open Court on 23rd November 2022.