1998 (3) TMI 185 - AT - Wealth-tax

Issues Involved:

1. Exemption of land leased out to M/s. R. Narayan Dying & Printing Mills Ltd. under Clause (VI) to sub-section (3) of section 40 of Finance Act, 1983.
2. Exemption of building valued at Rs. 3,50,000 under Clause (VI) of Sub-section (3) of Section 40 of the Finance Act, 1983.
3. Valuation of land at Rs. 9,00,000 instead of book value as per Rule 14(2)(ii) of Schedule III to the Wealth-tax Act, 1957.
4. Valuation of building at Rs. 3,50,000 instead of its written down value as per Rule 14(2)(i) of Schedule III to the Wealth-tax Act, 1957.
5. Consideration of valuation report received after completion of assessment.
6. Market value determination of land appurtenant to the factory building.
7. Valuation of factory building at Rs. 3,50,000 instead of Rs. 10,00,000.

Detailed Analysis:

1. Exemption of Land Leased Out:
The assessee contended that the land leased to M/s. R. Narayan Dying & Printing Mills Ltd. should be exempt under Clause (VI) to sub-section (3) of section 40 of Finance Act, 1983. The CIT(Appeals) disagreed, stating the land was not appurtenant to the factory building and hence not exempt. This ground was not pressed by the assessee's counsel and was thus rejected.

2. Exemption of Building Valued at Rs. 3,50,000:
The CIT(Appeals) held that the building valued at Rs. 3,50,000 was not a factory building exempt under Clause (VI) of Sub-section (3) of Section 40 of the Finance Act, 1983. The assessee argued that the building was transferred to M/s. R. Narayan Dying & Printing Mills Ltd., but the CIT(Appeals) and the Tribunal upheld that without a registered sale deed, the building remained assessable in the hands of the appellant-company.

3. Valuation of Land at Rs. 9,00,000:
The assessee argued the land should be valued at book value as per Rule 14(2)(ii) of Schedule III to the Wealth-tax Act, 1957. The CIT(Appeals) valued the land at Rs. 9,00,000 using the rent capitalisation method. The Tribunal found the valuation reasonable and justified, rejecting the assessee's contention.

4. Valuation of Building at Rs. 3,50,000:
The assessee contended the building should be valued at its written down value as per Rule 14(2)(i) of Schedule III to the Wealth-tax Act, 1957. The CIT(Appeals) valued the building at Rs. 3,50,000, which the Tribunal upheld, dismissing the assessee's argument.

5. Consideration of Valuation Report Post-Assessment:
The Revenue argued that the valuation report received after the completion of assessment should be considered, and the value determined by the Valuation Officer should be adopted. The Tribunal upheld the CIT(Appeals)'s view that there is no provision in the Wealth Tax Act allowing the Assessing Officer to adopt post-assessment valuation reports, referencing the ITAT Chandigarh decision in IAC v. Amrinder Singh.

6. Market Value Determination of Land:
The Revenue contested the CIT(Appeals)'s direction to take the market value of land at Rs. 9,00,000 instead of Rs. 27,00,000. The Tribunal found the CIT(Appeals)'s valuation using a multiplier of 12.5 times based on rent capitalisation method reasonable and justified, dismissing the Revenue's appeal.

7. Valuation of Factory Building:
The CIT(Appeals) directed the Assessing Officer to value the factory building at Rs. 3,50,000 instead of Rs. 10,00,000. The Tribunal upheld this valuation, noting the building was transferred to M/s. R. Narayan Dying & Printing Mills Ltd. and the beneficial owner concept as per the Supreme Court's decision in CIT v. Podar Cement (P.) Ltd. applied. The Tribunal directed the deletion of the Rs. 3,50,000 addition in the assessee's hands.

Conclusion:
The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal, upholding the CIT(Appeals)'s valuations and rejecting the inclusion of the factory building's value in the assessee's taxable wealth.

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