2016 (5) TMI 569 - AT - Wealth-tax

Net wealth computation - exclusion of property @ Delhi taken on lease - that - The case made out before us is that the above stated Delhi house is on rent with the assessee and the same cannot be treated to be belonging to him. The Revenue fails to quote any statutory provision or a judicial precedent before us which could repel assessee s contention that a residential house taken on rent could be assessed as net wealth in the hands of a tenant. We reiterate that the assessee has already placed on record sufficient evidence proving regular rent payments already allowed as expenditure in income tax assessments. We do not find any reason to interfere with the lower appellate finding under challenge. We accordingly conclude that the CWT(A) has rightly taken assessee s Delhi rented property to be out of the purview of the Wealth Tax provisions thereby directing the Assessing Officer to claim section 5(vi) relief qua Baroda property.

Summary

Issues:
1. Whether the property taken on lease in Delhi should be included in the Assessee's net wealth.
2. Whether the addition made for Baroda house property should be deleted and the Assessee's claim under section 5(vi) of the Wealth Tax Act should be allowed.

Analysis:
1. The appeals pertain to assessment years 2004-05 & 2005-06 under the Wealth Tax Act, 1957. The primary issue revolves around the treatment of the property taken on lease in Delhi by the Assessee. The Revenue contended that the property should be included in the Assessee's net wealth. However, the CWT(A) ruled in favor of the Assessee, stating that since the property was rented and not owned by the Assessee, it should be exempt from wealth tax. The CWT(A) further noted that the Assessee used the property for both residential and business purposes, supporting the exemption claim under section 5(vi) of the Act. The CWT(A) concluded that the Delhi rented property should be excluded from wealth tax assessment, directing the Assessing Officer to allow relief for the Baroda property instead.

2. The second issue pertains to the addition of ?32,00,000 for the Baroda house property and the Assessee's claim under section 5(vi) of the Wealth Tax Act. The Revenue argued that the addition was justified, while the Assessee contended that the Baroda property should be exempt under section 5(vi). The CWT(A) agreed with the Assessee, emphasizing that once the Delhi property was deemed not taxable, the Assessee had the choice to claim exemption for either the Ahmedabad or Baroda property. The CWT(A) found in favor of the Assessee, directing the deletion of the addition for the Baroda property and allowing the claim under section 5(vi) for the same.

In conclusion, the Tribunal dismissed the Revenue's appeals for both assessment years, upholding the CWT(A)'s decisions regarding the treatment of the Delhi rented property and the Baroda property under the Wealth Tax Act. The judgments were pronounced on April 29, 2016.