1987 (11) TMI 122 - AT - Wealth-tax

Summary

Issues:
1. Whether the advance made for the purchase of a commercial flat constitutes an asset under the Wealth Tax Act.
2. Whether the valuation of flats should include the advance paid before possession and conveyance.

Analysis:

Issue 1:
The appeals revolve around the classification of an advance made for the purchase of a commercial flat as an asset under the Wealth Tax Act. The AAC held that until possession was granted, the advance could not be considered a right in the property, thus not falling under the definition of assets. The Revenue argued that the advance should be considered an asset, while the respondent contended that the valuation was the key issue, not the classification as an asset.

Issue 2:
The assessment year in question was 1981-82, where the return initially declared a wealth of Rs. 8,86,792, later revised to Rs. 9,08,500 due to an error in mentioning the deposit with the construction company. The AAC overturned the assessments, stating that the advance for the property could not be considered an asset until possession was granted. The Tribunal agreed with the AAC's decision, emphasizing that possession and final payment were crucial factors in determining ownership. The Tribunal cited recent judicial precedents, including a Supreme Court judgment, to support the view that ownership is not established solely by possession without a conveyance deed.

In conclusion, the Tribunal dismissed the Revenue's appeals, affirming that the advance paid for the commercial flat could not be considered an asset for wealth tax purposes until possession was granted. The Tribunal highlighted the importance of possession and final payment in determining ownership, in line with recent judicial pronouncements.