1985 (7) TMI 157 - AT - Wealth-tax

Summary

Issues:
1. Valuation of a flat for assessment year 1977-78.
2. Exemption claim under section 5(1)(iv) of the Wealth-tax Act, 1957.

Detailed Analysis:

Issue 1: Valuation of the flat
The dispute in this case revolves around the valuation of a flat located in New Delhi. The assessee initially declared the market value of the flat at Rs. 1,90,000 based on a valuation report but later revised it to Rs. 1,53,645, citing a legal decision. The WTO valued the flat at Rs. 4,29,960 using the yield method. The assessee contended that the valuation should be based on standard rent, relying on legal precedents. However, the revenue argued that the WTO's valuation was justified as per rule 1BB. The ITAT observed that the actual rent received by the assessee should be the basis for valuation unless proven otherwise. The onus was on the assessee to show that the rent was not maintainable in the future, which they failed to do. Consequently, the ITAT upheld the valuation based on the actual rent received by the assessee.

Issue 2: Exemption claim under section 5(1)(iv)
The assessee claimed exemption under section 5(1)(iv) of the Wealth-tax Act, which was initially rejected by the WTO on the grounds that the assessee did not own the flat. However, the AAC accepted the claim, leading to an appeal by the revenue. The ITAT analyzed the legal interpretation of the term "belonging to" in the context of property ownership. Referring to relevant case laws, the ITAT concluded that even a limited interest in the property could make the assessee eligible for exemption under section 5(1)(iv). Since the assessee was in possession of the flat and had a legal interest, the ITAT upheld the decision of the AAC regarding the exemption claim. Consequently, both appeals were dismissed, confirming the order of the AAC.