Land in Sowripalayam Village deemed asset under Wealth-tax Act despite building restrictions. Guidelines followed for valuation.

The Tribunal held that the land in Sowripalayam Village was deemed an asset under the Wealth-tax Act, despite restrictions on constructing multistoried commercial buildings. The Assessing Officer's valuation based on guideline value was upheld, as the land was initially classified for residential use, allowing construction of residential units. The Tribunal considered pending civil suits in determining the land's market value and directed the Assessing Officer to assess the land considering these implications. The appeal of the assessee was allowed for statistical purposes.

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Issues:
Assessment of land as an asset under the Wealth-tax Act based on construction permissions and civil suit implications.

Analysis:
The appeal concerned the assessment of land in Sowripalayam Village, Coimbatore, under the Wealth-tax Act for the assessment year 2008-09. The Assessing Officer reopened the assessment as the wealth of the assessee had escaped assessment. The dispute revolved around whether the land was an asset under sec. 2(ea) of the Act. The Assessing Officer valued the land based on guideline value, while the assessee claimed it was not an asset due to restrictions on construction. The Commissioner of Wealth-tax(Appeals) found that the land could not be treated as an asset due to the prohibition on constructing multistoried buildings without a 9 mtrs access road. The Revenue contended that only multistoried commercial buildings were prohibited, not residential units. The Tribunal noted that the land was initially classified as residential use zone, and the government later approved a change to commercial use. It concluded that construction of a residential unit was permissible, only multistoried commercial buildings were restricted. Thus, the CWT(A) was incorrect in deeming the land not an asset.

The assessee argued that until acquiring an access road, the land could not be considered an asset. The Tribunal observed that the construction of a residential building was allowed under existing regulations, and the land was converted to a commercial zone later. It noted that the construction of a multistoried commercial complex was prohibited, not residential units. The Tribunal disagreed with the CWT(A) and held that the land was indeed an asset under sec. 2(ea) of the Act. The pending civil suits were also considered, with the Tribunal stating that the market value of the land should account for the suits' implications. It directed the Assessing Officer to value the land considering the civil suits. The appeal of the assessee was allowed for statistical purposes.

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