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2017 (11) TMI 249 - AT - Wealth-taxAddition in return wealth of the assessee by treating unapproved/agriculture plots/lands as taxable assets - Held that - The asset is exempt in view of the provisions of Section 2(ea)(iv) of Wealth tax Act. As on this land the construction is not permissible. Secondly, the assessee has disputed the valuation adopted by the Assessing Officer. We have given our thoughtful consideration to the contention of the assessee. We find that the Assessing Officer has not made any enquiry from the concerned authorities i.e. Jaipur Development Authority whether the construction of building is permissible on the land further no effort is made as to ascertain what is the fair market value of the assets. Under these facts, we therefore set aside the order of the authorities below and restore this issue to the file of the Assessing Officer to decide afresh. The AO would make enquiry in respect of the claim of the assessee that no building is permissible on the land and also would refer the issue of valuation of the cost of assets to the DVO to ascertain the fair market value for the purpose of computing the wealth tax, if he is not satisfied qua the claim of the assessee that asset is exempt. Hence, Ground no. 1, is allowed for statistical purpose. Non-allowing deduction of debts - Held that - This Tribunal in assessee s own case pertaining to the Assessment Year 2006-07 held as no material on record to support the contentions raised by the ld AR which satisfies the above requirement of establishing the necessary nexus between the debt and the assets in question. Since we have set-aside the matter relating to determination of pieces of land/plot as eligible to wealth tax and the applicability of the exclusion clause, this issue is also set-aside to the file of the AO to examine the same afresh as per law
Issues Involved:
1. Addition of ?1,74,10,005/- in returned wealth by treating unapproved/agriculture plots/lands as taxable assets. 2. Non-allowing deduction of debts of ?1,04,59,830/- claimed to be utilized for acquiring taxable assets. Detailed Analysis: Issue 1: Addition of ?1,74,10,005/- in Returned Wealth Grounds of Appeal: - The assessee contested the addition of ?1,74,10,005/- by the Commissioner of Wealth Tax Appeals (CIT(A)), arguing that the unapproved/agricultural plots/lands should not be treated as taxable assets because construction was not permissible on these assets. Assessee's Submissions: - The plots/lands were either agricultural or unapproved by the Jaipur Development Authority (JDA), and construction was not permissible under JDA rules. - According to Section 2(ea)(iv) of the Wealth Tax Act, urban land does not include land classified as agricultural or land where construction is not permissible. - The Jaipur Development Authority Act, 1982, mandates prior permission from JDA for any development, and unauthorized constructions can be demolished by JDA. - The assessee argued that since the lands were unapproved and construction was not permissible, they should not be considered taxable assets. Revenue's Submissions: - The Revenue opposed the submissions and supported the order of the authorities below. Tribunal's Findings: - The Tribunal noted that the Assessing Officer (AO) did not make any inquiry from JDA regarding the permissibility of construction on the land. - The AO also did not ascertain the fair market value of the assets. - The Tribunal set aside the order of the authorities below and restored the issue to the AO for fresh decision. The AO was directed to inquire from JDA about the construction permissibility and refer the valuation to the District Valuation Officer (DVO) if not satisfied with the assessee's claim. Outcome: - Ground no. 1 was allowed for statistical purposes, and the matter was remanded to the AO for further inquiry. Issue 2: Non-allowing Deduction of Debts of ?1,04,59,830/- Grounds of Appeal: - The assessee argued that the AO erred in not allowing the deduction of debts amounting to ?1,04,59,830/- used for acquiring taxable assets. Assessee's Submissions: - The assessee cited a previous Tribunal decision in their own case, where a similar issue was restored to the AO for fresh decision. - The assessee relied on the judgment in CWT vs Gwalior Rayon Silk Mfg. (WVG.) Co. Ltd. and other case laws to support their claim for debt deduction. Revenue's Submissions: - The Revenue supported the order of the authorities below. Tribunal's Findings: - The Tribunal noted that the requirement of law is to reduce the value of all debts owed by the assessee on the valuation date, which have been incurred in relation to the taxable assets. - The Tribunal found no material on record to support the assessee's claim of a nexus between the debt and the assets. - The matter was set aside to the AO for fresh examination, following the same reasoning as in the previous year’s case. Outcome: - Ground no. 2 was allowed for statistical purposes, and the matter was remanded to the AO for further examination. Combined Result: - Both Wealth Tax Appeals (WTA Nos. 05 & 06/JP/2017) were allowed for statistical purposes, and the matters were remanded to the AO for fresh decisions based on the directions provided. Order Pronouncement: - The order was pronounced in the open court on Tuesday, the 31st day of October 2017.
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