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Whether deduction on account of unearned increase @ 25% under Schedule III of W.T. Act is to be allowed to assessees who are owners of flats constructed on leasehold land in New Delhi. Analysis: The issue before the tribunal was whether the assessees, who are owners of flats in New Delhi constructed on leasehold land, are entitled to a deduction of unearned increase @ 25% under Schedule III of the Wealth Tax Act. The assessees claimed the deduction based on an agreement with the sellers and guidelines issued by the Government of India. The lower authorities denied the deduction, stating that the assessees did not have any interest in the land and were only owners of flats. In appeal, the assessees argued for the deduction, while the revenue contended that the claim was rightly rejected by the lower authorities. Upon considering the submissions, the tribunal analyzed Rule 7 of Schedule III of the Wealth Tax Act. The rule specifies conditions for claiming adjustment for unearned increase in land value, including that the property must be constructed on leased land from the government or a local authority. The tribunal examined the agreement where the seller was the lessee of the land and sold flats to the assessees. It was established that the assessees did not have to pay the unearned increase to the lessor, as it was the seller's obligation. The tribunal concluded that the assessees were not entitled to the deduction as they did not fulfill the conditions under Rule 7. Therefore, the tribunal ruled against the assessees and in favor of the revenue, dismissing the appeals filed by the assessees. The decision was based on the interpretation of the relevant legal provisions and the specific circumstances of the case, highlighting that the assessees were not eligible for the claimed deduction under Schedule III of the Wealth Tax Act.
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