2016 (5) TMI 14 - AT - Wealth-tax

Inclusion of Agricultural lands for the purpose of wealth tax - A.O. was of the opinion that though the lands are agricultural lands they are situated within the 8 kms. from the local limits of the municipality therefore liable for wealth tax - contention of the assessee that the lands are classified as agricultural lands and also used for agricultural purpose as per the revenue records of the Government - Held that - We find force in the arguments of the assessee for the reason that the Finance Act 2013 with retrospective effect from 1.4.1993 has amended the definition of urban lands and as per the amended definition urban land means any lands classified as agricultural land as per the revenue records of the Government and used for the agricultural purpose are not asset within the meaning of section 2(ea) of the Act. In the present case on hand it is an undisputed fact that the lands are agricultural lands and used for agricultural purposes. The A.O. himself has admitted that these lands are agricultural lands. The only contention of the A.O. is that these lands are situated within 8 kms. from the local limits of municipality. As per the amended definition of urban land the distance from the municipality is not a criteria to determine whether the lands are assets or not. Once the lands are classified as agricultural lands in the revenue records of Government and used for agricultural purpose then the same are outside the purview of the definition of assets as per section 2(ea) of the Act. The CIT(A) after considering the explanations furnished by the assessee rightly deleted the additions made by the AO. Therefore we inclined to uphold the order of the CIT(A) and direct the A.O. to exclude the agricultural lands for the purpose of wealth tax. - Decided in favour of assessee Taxability of house property situated at Tirupur - Held that - On verification of the sale deed we find that though the property has been sold for a consideration of 14, 01, 000/- the sub registrar at the time of registration of the property has collected additional stamp duty and penalty. The sale deed copy was available in the local language of Tamil. Though English translation copy is available in the file the details are not clear from the sale deed that whether the market value of the property is at 14, 01, 000/- or not. The assessee contends that the market value of the property is at 14, 01, 000/-. But the fact remains that at the time of registration of the property additional stamp duty and penalty was collected cannot be ignored. Under these circumstances we are of the opinion that the issue needs to be examined by the A.O. in the light of the above discussions. Therefore we set aside the issue to the file of the A.O. and direct the A.O. to examine whether the sale deed copy produced by the assessee shows the market value of the property at 14, 01, 000/- or not. In case the market value of the property is at 14, 01, 000/- then the same should be adopted for the purpose of determination of taxable wealth. - Decided in favour of revenue for statistical purposes.

Summary

Issues:
1. Classification of agricultural lands for wealth tax assessment.
2. Valuation of a residential house property for wealth tax purposes.

Analysis:
1. Classification of Agricultural Lands:
The case involved a dispute regarding the classification of agricultural lands situated at Gollapudi and Ibrahimpatnam for wealth tax assessment. The Assessing Officer (A.O.) initially treated these lands as assets liable for wealth tax due to their proximity to the local municipality. However, the assessee contended that as per the amended provisions of the Finance Act, 2013, any land classified as agricultural land in government records and used for agricultural purposes is not considered an asset under the Wealth Tax Act. The CIT(A) upheld the assessee's argument, directing the A.O. to exclude the agricultural lands from wealth tax assessment. The Tribunal agreed with the CIT(A), emphasizing that the lands being agricultural and used for agricultural purposes as per government records were not liable for wealth tax, irrespective of their proximity to the municipality.

2. Valuation of Residential House Property:
Regarding the valuation of a residential house property at Tirupur for wealth tax purposes, the A.O. determined the value based on information from the sub registrar office, which was significantly higher than the value claimed by the assessee based on a subsequent sale deed. The Tribunal observed discrepancies in the sale deed, including additional stamp duty and penalties collected at the time of registration. As the English translation of the sale deed did not provide clear details on the market value, the Tribunal directed the A.O. to reexamine the issue. The A.O. was instructed to verify if the sale deed indeed indicated a market value of ?14,01,000, and if so, to adopt this value for determining taxable wealth. Consequently, the Tribunal partially allowed the revenue's appeal for statistical purposes, setting aside the valuation issue for further examination by the A.O.

In conclusion, the Tribunal upheld the CIT(A)'s decision to exclude the agricultural lands from wealth tax assessment and directed a reevaluation of the valuation of the residential house property, emphasizing the need for clarity on the property's market value based on the sale deed presented by the assessee.