1991 (9) TMI 98 - AT - Wealth-tax

Summary

Issues:
1. Whether the amount paid by the assessee to a co-operative housing society is a deposit within the meaning of section 5(1)(xxx) of the Wealth Tax Act, 1957 and entitled to exemption.
2. Whether the provisions of section 4(7) of the Act are applicable in determining the net wealth of the assessee.
3. Whether the market value of the plot or the amount paid to the society should be included in the net wealth of the assessee.

Analysis:
1. The appeal raised two primary issues related to a plot of land allotted to the assessee in a co-operative housing society. The first issue was whether the amount paid to the society, Rs. 25,230, qualified as a "deposit" under section 5(1)(xxx) of the Wealth Tax Act, 1957, and hence eligible for exemption. The second issue was the application of section 4(7) of the Act in determining the net wealth of the assessee, specifically regarding the valuation of the plot on the relevant date.

2. The assessee contended that the amount paid was a deposit and thus exempt under section 5(1)(xxx). However, the WTO considered the assessee as the owner of the plot and valued it at Rs. 1,60,000 based on market rates. The Deputy Commissioner (Appeals) upheld this view, emphasizing the full payment made by the assessee and the appreciation in land value over time.

3. The counsel for the assessee argued that the provisions of section 4(7) were incorrectly applied since the assessee was allotted a plot, not a building. Referring to the agreement with the society, the counsel asserted that the assessee was designated as a "tenant owner" with restrictions on construction and sale. However, the tribunal found no clauses restricting ownership rights, concluding that the amount paid was the purchase price, not a deposit. The tribunal directed a revised valuation of the plot at Rs. 150 per sq. yd.

4. The tribunal rejected the argument that only the amount paid should be subject to wealth tax, clarifying that the market value on the valuation date must be considered, especially without apparent restrictions. The valuation of silver utensils and gold ornaments, the remaining ground in the appeal, was not pressed and thus rejected. The appeal was partly allowed, with the tribunal providing relief to the assessee based on the revised valuation of the plot.