1987 (1) TMI 144 - AT - Wealth-tax

Summary

Issues Involved:

1. Valuation of agricultural land.
2. Inclusion of Mehrauli land in the hands of the HUF.
3. Valuation of immovable properties comprising factories and residential houses.
4. Addition of properties allegedly belonging to a larger HUF.

Detailed Analysis:

1. Valuation of Agricultural Land:

The first issue concerns the valuation of agricultural land covering 18 acres, in which the assessee held a 1/3rd share. The assessee valued the land at Rs. 8,000 per acre, totaling Rs. 1,10,000 in the revised return. The Wealth Tax Officer (WTO) valued the land at Rs. 3 lakh, using a yield-based method. The Commissioner of Wealth Tax (Appeals) [CWT(A)] accepted the assessee's valuation. The Tribunal upheld the CWT(A)'s decision, noting that the yield method should be used only when other methods are unavailable. The Tribunal assigned a value of Rs. 1,14,000 for the agricultural land, including a valuation of Rs. 4,000 for the 'banjar' land not in possession of the assessee.

2. Inclusion of Mehrauli Land:

The second issue pertains to the inclusion of Mehrauli land, which the assessee received as an individual gift. The WTO included the value of this land in the hands of the HUF, arguing that the gift deed indicated it was for the HUF. The CWT(A) ruled that the land was received by the assessee in an individual capacity and even if it was included in the HUF's common hotch-potch, it should be excluded under Section 4(1A). The Tribunal upheld the CWT(A)'s decision, stating that the gift deed did not indicate an intention to gift the land to the HUF.

3. Valuation of Immovable Properties:

The third issue involves the valuation of immovable properties, including factories and residential houses. The Departmental Valuation Officer (DVO) argued for a higher valuation using the land and building method. The CWT(A) applied Rule 1BB, resulting in a lower valuation. The Tribunal upheld the CWT(A)'s decision, noting that Rule 1BB is mandatory and should be applied. The Tribunal confirmed the valuation of the residential property known as 'Singla House' at Rs. 1,41,595 and rejected the DVO's higher valuation. For factory buildings, the Tribunal upheld the rent capitalization method, noting that the properties were tenanted since 1962, and there was no evidence of collusion.

4. Addition of Properties Allegedly Belonging to a Larger HUF:

The fourth issue concerns the addition of properties allegedly belonging to a larger HUF, M/s Phool Chand Chhaju Ram. The WTO included a share of Rs. 61,440 in the assessee's wealth, arguing that the larger HUF had been partitioned. The CWT(A) ruled that the properties belonged to the larger HUF and should not be included in the assessee's wealth. The Tribunal upheld the CWT(A)'s decision, noting that the larger HUF continued to be assessed until 1974-75, and there was no recognized partition under Section 171.

Conclusion:

The Tribunal partially allowed the appeal, confirming the CWT(A)'s decisions on the valuation of agricultural land, inclusion of Mehrauli land, and valuation of immovable properties. The Tribunal also upheld the CWT(A)'s decision to exclude the properties allegedly belonging to a larger HUF from the assessee's wealth.