2016 (8) TMI 1583 - AT - Wealth-tax

Tribunal rules in favor of assessee on wealth tax valuation, jewellery purchase liability, and partnership interest.

Mrs. N. Sasikala Versus Deputy Commissioner of Income Tax, Central Circle-II (2), Chennai

The Tribunal ruled in favor of the assessee in an appeal concerning the valuation of immovable property, liability for jewellery purchase, and interest in ... Wealth tax assessment - value the immovable property as per section 7 and Schedule III of the Wealth Tax Act - Value of assets, how to be determined? - HELD THAT:- As evident that the Revenue, has to mandatorily value the assets of the assessee in accordance with Section 7 and Schedule-III of the Wealth Tax Act at the option of the assessee. It appears from the order of the Revenue that these provisions of the Wealth Tax Act are lost sight off. Therefore, we hereby direct the learned Wealth Tax Officer to compute the value of the immovable properties of the assessee in accordance with section 7 Schedule III PartB of the Wealth Tax Act for the purpose of levying Wealth Tax in the case of the assessee. Thus this ground is allowed in favour of the assessee. Consideration of the liability incurred by the assessee towards M/s. Jaya Publications for purchase of jewellery - From the order of the learned Wealth Tax Officer, it is evident that the assessee has incurred liability of ₹ 40.00 lakhs towards M/s. Jaya Publication. Section 6 of the Wealth Tax Act makes it clear that any liability owing to asset has to be excluded. From the facts of the case, it is not in dispute that the assessees have not incurred the liability of ₹ 40.00 lakhs towards M/s. Jaya Publication. The existence of such liability is also not disproved as on date. Now the only issue involved is whether it is attributable for the purchase of jewellery. There is nothing on record to suggest that these liabilities are not attributable for the purchase of jewellery. Obviously, it has to be related to one of the assets of the assessee which the assessee claims it to be jewellery. In any case, as per the definition of ‘Net Wealth’ section 2(m) of the Wealth Tax Act, the liability of debt has to be excluded while determining the net wealth of the assessee. Therefore, we hereby direct the learned Wealth Tax Officer to exclude the liability while valuing the jewellery of the assessee. Accordingly this issue is also decided in favour of the assessee. Valuation of the interest in partnership firm in accordance with section 7(1) read with schedule III-15 & 16 Part- E - On perusing the relevant provisions of the Wealth Tax Act we find merit in the contention of the learned Authorized Representative. As per the provisions of Wealth Tax Act, interest in firm has to be valued as per Section 7 read with Schedule III-15 & 16 Part-E of the Wealth Tax Act. Therefore, we hereby direct the learned Wealth Tax Officer to value the assessee’s interest in the partnership firm in accordance with section 7(1) r.w Schedule III-15&16 Part-E of Wealth Tax Act. Thus, this issue is also allowed in favour of the assessee. Issues:Valuation of immovable property under Wealth Tax Act, Consideration of liability towards purchase of jewellery, Valuation of interest in partnership firm.Valuation of Immovable Property:The appeal concerned the valuation of immovable property under the Wealth Tax Act. The assessee disputed the method of valuation adopted by the Wealth Tax Officer, emphasizing the need to follow Section 7(1) and Schedule III for valuation. The Tribunal found that the Revenue failed to value the assets in accordance with the Act, directing the Wealth Tax Officer to compute the value as per Section 7 Schedule III Part B, thereby ruling in favor of the assessee.Consideration of Liability for Jewellery Purchase:The second issue revolved around the liability of Rs. 40,00,000 incurred by the assessee towards purchasing jewellery from M/s. Jaya Publications. The Authorized Representative argued that this liability should be excluded while valuing the jewellery. The Tribunal agreed, stating that any liability related to an asset should be excluded as per Section 6 of the Wealth Tax Act. Therefore, the Wealth Tax Officer was directed to exclude the liability while valuing the jewellery, deciding in favor of the assessee.Valuation of Interest in Partnership Firm:The final issue involved the valuation of the assessee's interest in partnership firms. The Authorized Representative contended that the valuation should align with Section 7(1) read with Schedule III-15 & 16 Part-E of the Wealth Tax Act. The Tribunal agreed with this argument, directing the Wealth Tax Officer to value the interest in the partnership firm as per the specified provisions. Consequently, this issue was also decided in favor of the assessee.The Tribunal considered the arguments presented by both parties, noting the discrepancies in the valuation methods applied by the Revenue. By analyzing the relevant provisions of the Wealth Tax Act, the Tribunal ruled in favor of the assessee on all grounds raised during the appeal. As a result, the appeal of the assessee was allowed, and the decision was pronounced in open court on 1st August 2016.