2019 (10) TMI 90 - AT - Wealth-tax

Wealth tax assessment - exclusion of land which is under litigation - HELD THAT - When the compound wall construction had started, there is no reference in facts mentioned in the case (refer page 18). However, it is mentioned that even on 08.07.2007 and 09.07.2007, the construction work was disturbed by the defendants. Thereafter, the case was filed in F.Y 2007-08 relevant to A.Y 2008-09. But, before us, the AY pending for adjudication is A.Y 2006-07 and 2007-08. The dispute on title was started only in A.Y 2008-09. Therefore, it has no bearing on pending assessment years. Now the dispute is very much settled and in favour of the assessee. Therefore, the plea of assessee is rejected. Even though assessee had title but could not enjoy the property due to dispute. The asset is recognised as asset only when it is enjoyed by the assessee for the period subsequent to the disputed assessment years. Therefore, in our view, she should be allowed to get some concession - similar concession should also be extended to assessee. Therefore, we are directing A.O to allow the 500 Sq. mtr as deduction and balance can be brought to tax under WTA. Accordingly, grounds raised by the assessee are partly allowed.

Summary

Issues:
1. Appeal against the order of CIT(A) for AY 2007-08 and AY 2006-07.
2. Assessment of the value of a plot of land for wealth tax purposes.
3. Exemption under section 2(ea) of the Wealth Tax Act for land under litigation.
4. Consideration of market value and clear marketable title in wealth tax assessment.
5. Claiming exemption for property under dispute.
6. Determination of assets subject to wealth tax based on enjoyment by the assessee.

Analysis:
1. The appeal before the Appellate Tribunal ITAT Hyderabad combined two appeals against the orders of the CIT(A) for AY 2007-08 and AY 2006-07 due to identical issues. The appeals were clubbed and heard together for convenience, resulting in a common order.

2. The case involved the assessment of the value of a plot of land for wealth tax purposes. The Assessing Officer (AO) issued a notice to the assessee regarding a plot of land in Jubilee Hills, Hyderabad. The AO assessed the value of the property at ?3,06,60,000 after adopting a value of ?35,000 per sq. yard. The net wealth was determined after deducting the standard amount.

3. The assessee contended that the land under dispute was exempt under section 2(ea) of the Wealth Tax Act. However, the CIT(A) dismissed the appeal, stating that the provision only excludes land where construction is not permissible, not land under litigation. The CIT(A) held that there was no merit in the assessee's arguments.

4. The Appellate Tribunal considered the arguments of both parties. The assessee claimed that due to the ongoing litigation, the property did not fall under the assets category for wealth tax purposes. The Tribunal noted that the dispute was resolved in favor of the assessee, but the property was not enjoyed during the disputed assessment years.

5. The Tribunal acknowledged that the assessee had the title to the property but could not enjoy it due to the dispute. Citing a similar case, the Tribunal allowed a concession for 500 sq. meters of land. The remaining area was to be brought under wealth tax. The Tribunal directed the AO to allow the deduction accordingly.

6. Both appeals were partly allowed by the Tribunal, granting relief to the assessee based on the enjoyment and concession related to the disputed property. The decision was pronounced on 5th September 2019.