2001 (10) TMI 39 - HC - Income Tax

Court excludes open plots from wealth tax, ruling in favor of assessee, emphasizing buildings for taxation.

The court ruled in favor of the assessee, holding that the value of the assessee's 1/4th interest in open plots in co-operative housing societies should ... - Issues Involved:1. Determination of the value of the assessee's 1/4th interest in open plots in two co-operative housing societies u/s 4(1)(b), 4(2), and 4(7) of the Wealth-tax Act, 1957.2. Justification for the Tribunal's rejection of the assessee's miscellaneous applications.Summary:Issue 1: Determination of Value of Assessee's InterestThe primary issue was whether the Tribunal was justified in including the value of the assessee's 1/4th interest in open plots in two co-operative housing societies in the net wealth of the assessee, valued at Rs. 40,125. The assessee contended that only deposits amounting to Rs. 20,000 made with the societies should be considered as assets for wealth-tax purposes, and thus only Rs. 5,000 should be included in his net wealth. The Tribunal dismissed the assessee's appeal, holding that the leasehold interest in the lands for 998 years was an asset and should be included in the net wealth.The court analyzed the relevant statutory provisions, including sections 3, 2(m), 2(e), 4(1)(b), 4(7), 5(1)(xxviii), and 45(g) of the Wealth-tax Act. It concluded that properties belonging to a co-operative housing society and shares held in such societies are exempt from wealth-tax. The court emphasized that the Legislature intended to include only buildings or parts thereof, along with the land appurtenant thereto, in the net wealth for wealth-tax purposes, not open plots of land. The court rejected the Revenue's argument that 'building or part thereof' should include open plots of land.The court held that the assessee's interest in open plots of land belonging to a co-operative housing society and allotted or let out to the member is exempt from wealth-tax. The Tribunal erred in holding otherwise.Issue 2: Rejection of Miscellaneous ApplicationsThe second issue was whether the Tribunal was justified in rejecting the assessee's miscellaneous applications on the ground that there was no mistake in its order dated July 14, 1986. Given the court's decision on the first issue, this question became academic and was not required to be answered.Conclusion:The court answered the reframed question in the negative, in favor of the assessee and against the Revenue. The reference was disposed of with no order as to costs.