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Issues Involved:
1. Exclusion of a house property at Ramananthapur, Hyderabad, for wealth-tax assessments. 2. Determination of the fair market value of the property for wealth-tax purposes. Issue-wise Detailed Analysis: 1. Exclusion of Property from Wealth-tax Assessments: The primary issue in these appeals is whether the house property at Ramananthapur, Hyderabad, should be excluded from wealth-tax assessments for the assessment years 1986-87, 1987-88, and 1991-92. The assessee argued that the property was virtually sold through an agreement of sale executed on 14-4-1985, with possession handed over and full consideration of Rs. 8 lakhs received. Despite the sale deed not being registered, the assessee claimed she was not legally in possession or enjoyment of the property and thus not the owner for wealth-tax purposes. The Assessing Officer, relying on the Supreme Court decision in Nawab Sir Mir Osman Ali Khan v. CWT [1986] 162 ITR 888, held that since the property was not conveyed through a registered document, the assessee remained the legal owner and was required to disclose its value in her wealth returns. The Commissioner (Appeals) concurred, leading to the assessee's appeal to the Tribunal. The Tribunal upheld the view that the legal title remained with the assessee as the property was not registered, making her accountable for wealth-tax. However, the Tribunal noted that the Commissioner (Appeals) did not consider the valuation issue, necessitating further examination. 2. Determination of Fair Market Value: The second issue concerns the fair market value of the property for wealth-tax assessments. The Assessing Officer had valued the property at Rs. 33.64 lakhs based on the Departmental Valuation Officer's report. The assessee contended that the property's market value should not exceed Rs. 8 lakhs, the consideration received, as the property was already handed over to the buyer under a valid agreement. The Tribunal acknowledged that while the legal title was with the assessee, the property was practically sold, and possession and enjoyment were transferred to the buyer. The Tribunal considered the factual matrix, including the irrevocable power of attorney executed by the assessee in favor of the buyer, and concluded that the property could not realistically be offered for sale in the open market. It was doubtful whether the assessee could sell the property to anyone other than the buyer, who could seek legal recourse to enforce the sale agreement. The Tribunal determined that the property's market value could not exceed the ostensible consideration of Rs. 8 lakhs, as there was no evidence of additional consideration received. The Tribunal referenced the Supreme Court's observations in Nawab Sir Mir Osman Ali Khan's case, which acknowledged that possession and full consideration payment could limit the property's market value to the agreed sale price. Conclusion: The Tribunal held that the property's market value for wealth-tax purposes should be Rs. 8 lakhs. Furthermore, as the assessee received Rs. 8 lakhs for the property, this amount should be treated as a corresponding liability. Consequently, the property's value is offset by the liability, resulting in no addition to the assessee's wealth for the years under appeal. The Tribunal directed the Assessing Officer to modify the assessments accordingly, leading to the appeals being allowed. Order: All three appeals of the assessee are allowed, and the Assessing Officer is directed to modify the assessments by excluding the property value from the wealth-tax computations.
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