2021 (1) TMI 973 - AT - Wealth-tax

Wealth tax assessment - additions in the valuation of jewellery - gross weight of jewellery as on 31.02.2012 declared in the wealth tax return was different from the gross weight of jewellery as on 31.03.2013 - HELD THAT - As during the course of search and subsequent opening of lockers the jewellery of all the family members were mixed up and valued, therefore, for the adjudication of this quarrel, we have considered the gross weight of jewellery of all the family members taken together as declared by them in their respective Wealth Tax Returns and as found at the time of search. No suppression in the valuation of jewellery and, therefore, enhancement made by the CIT(A) on this account is bad in facts and deserves to be deleted. We direct the WTO to delete the impugned enhancement in the value of jewelery from the hands of all the appellants. Enhancement in the valuation of property - Denial of exemption u/s.5(vi) of the Wealth Tax Act - It would be pertinent to mention here that the claim of exemption is being allowed to the appellants in earlier assessment years and it is only in the orders under consideration, the CIT(A) thought that the appellants are not eligible for the claim of exemption. The basis of reasoning given by the CIT(A) is that D-6/5, Vasant Vihar and E-27, Vasant Marg, New Delhi consists of more than one residential unit and, therefore, the appellants are eligible for exemption for only one residential unit. We find that D-6/5, Vasant Vihar and E-27 Vasant Marg, New Delhi are multi storey building. At this point we would like to refer to the decision of the Hon ble Kerala High Court in the case of CIT Vs. Nazima Nizam 64 taxman 375 wherein the Hon ble High Court allowed the exemption in respect of assessee s building which consisted four shop rooms. In the property D-6/5, Vassant Vihar, Lata Goyal is the owner of ground floor and first floor belongs to Monila Goyal and second floor belongs to Lata Goyal and Kanti Kumar Goyal E-27, Vasant Marg is owned by Lata Goyal. Lata Goyal has claimed exemption in respect of E-27, Vasant Marg and has included the value D-6/5, Vasant Vihar in her Wealth Tax Return. Treating a multi floor house as separate units is incorrect and, therefore, denial of the claim of exemption by CIT(A) thereby enhancing the value of property is bad in law and deserves to be deleted. Direct the WTO to delete the impugned addition of enhancement in the valuation of property from the hands of the appellants.

Summary

Issues:
- Enhancement of valuation of jewellery and property
- Claim of exemption under section 5(vi) of the Wealth Tax Act

Analysis:
1. Enhancement of Valuation of Jewellery and Property:
- Three separate appeals were filed by the assessee against the order of the CIT(A) concerning the valuation of jewellery and property for the assessment year 2013-14.
- The WTO made additions to the valuation of jewellery due to discrepancies in the declared gross weight, leading to additions in the hands of the appellants.
- The claim of exemption under section 5(vi) was allowed as claimed by the appellants initially.
- The CIT(A) found discrepancies in the valuation of jewellery and properties, leading to an enhancement notice being issued to the appellants.
- The CIT(A) enhanced the valuation of jewellery and properties, denying the claim of exemption and making additions to the value.
- The appellants explained that the jewellery was mixed during search proceedings, making it difficult to ascertain individual ownership during the filing of wealth tax returns.
- The ITAT considered a holistic approach, noting that the jewellery was mixed during the search and valuing process, leading to a conclusion that there was no suppression in the valuation of jewellery. Thus, the enhancement made by the CIT(A) was directed to be deleted.

2. Claim of Exemption under Section 5(vi) of the Wealth Tax Act:
- The CIT(A) denied the claim of exemption under section 5(vi) for the properties based on the premise that they consisted of multiple residential units.
- The ITAT disagreed with the CIT(A)'s reasoning, stating that treating multi-floor houses as separate units for exemption purposes was incorrect.
- Referring to a decision of the Hon'ble Kerala High Court, the ITAT emphasized that the denial of exemption and the consequent enhancement of property value by the CIT(A) was legally unsound.
- Consequently, the ITAT directed the WTO to delete the additions made in the valuation of the properties from the hands of the appellants.

In conclusion, the ITAT allowed the appeals on the grounds argued before them, emphasizing that there was no suppression in the valuation of jewellery and that the denial of exemption for the properties was incorrect. The orders of the CIT(A) enhancing the valuation of jewellery and properties were set aside, directing the deletion of the impugned enhancements.