2004 (10) TMI 283 - AT - Wealth-tax

Summary

Issues Involved:
1. Determination of the value of the assessee's share in the property.
2. Whether the share of the assessee in plot No. W-7, Greater Kailash II, New Delhi, had been declared as vacant land under the Urban Land (Ceiling & Regulation) Act, 1976, and its effect.
3. Whether the share of the assessee in the said plot was an 'asset' within the meaning of sub-clause (b) of section 2(ea) of the Wealth-tax Act.

Issue-Wise Detailed Analysis:

1. Determination of the Value of the Assessee's Share in the Property:
The assessee declared the value of her 1/8th share in the property at Rs. 11,70,009 in her wealth-tax return. The Assessing Officer, however, valued the share at Rs. 23,29,300 based on the District Valuation Officer's estimation. The CIT(A) referred to previous orders for assessment years 1993-94 and 1994-95 and determined the value at Rs. 13,75,820, giving the assessee a relief of Rs. 9,53,480. The Tribunal had reversed the CIT(A)'s order for the assessment year 1993-94, and the same was followed for 1994-95, favoring the assessee. The Tribunal's decision was based on the fact that the land in question could not be considered 'urban land' under the Wealth-tax Act.

2. Declaration of Vacant Land and Its Effect:
The assessee's contention was that her share in the vacant land at W-7, Greater Kailash-II, New Delhi, was not 'urban land' under clause (b) of Explanation 1 to section 2(ea) of the Wealth-tax Act. The Competent Authority had declared almost the entire share of the assessee in the plot as excess under the Urban Land (Ceiling & Regulation) Act, 1976, leaving only 10.34 sq. mts. in her share. Since the exemption for construction was not renewed after it expired, the land was considered excess vacant land on which construction was not permissible. The Tribunal confirmed that the land could not be treated as 'urban land' because construction was not permissible under the Urban Land (Ceiling & Regulation) Act, 1976.

3. Whether the Share was an 'Asset' under the Wealth-tax Act:
The definition of 'asset' under section 2(ea) includes 'urban land' but excludes land on which construction is not permissible. The Urban Land (Ceiling & Regulation) Act restricts the transfer and construction on excess vacant land. The Tribunal held that the land in question, being excess vacant land, could not be considered an 'asset' under the Wealth-tax Act. The Tribunal relied on the decision of the Hon'ble Calcutta High Court in Gouri Prasad Goenka & Family (HUF) v. CWT, which emphasized that land subject to the Urban Land Ceiling Act's restrictions could not be valued as freely transferable land.

Conclusion:
The Tribunal concluded that the excess vacant land in the assessee's share was not 'urban land' and thus not an 'asset' under the Wealth-tax Act. The Assessing Officer was directed to recompute the value of the remaining portion of the plot by adopting the value of Rs. 5500 per sq. mt., as determined for the assessment year 1993-94. The assessee's appeal was allowed, and the issues raised by the Revenue were decided in favor of the assessee.