1999 (6) TMI 49 - AT - Wealth-tax

Assessee's Appeal Partially Allowed: Valuation Upheld, Properties Exempt from Wealth Tax

The Tribunal partly allowed the assessee's appeal, upholding the valuation of claims in pending litigation and the debt owed on account of land ... Net Wealth, Valuation Of Assets Issues Involved:1. Valuation of claims in pending litigation relating to the enhancement of land acquisition compensation of agricultural lands.2. Debt owed on account of land acquisition.3. Air Field in the revenue estate Faridkot.4. Reviera Flats, Delhi.5. Okhla Plot, Delhi.6. Additional wealth-tax on urban property.7. Valuation of trees.8. Hotel Site, Chandigarh.Detailed Analysis:1. Valuation of Claims in Pending Litigation:The assessee challenged the valuation of claims in pending litigation concerning the enhancement of land acquisition compensation, arguing that such claims, being in flux and not final, should not be considered assets under sections 2(e) and 2(m) of the Wealth-tax Act. The Tribunal referenced its previous decisions and the Supreme Court ruling in Col. Sir Harinder Singh Brar Bans Bahadur's case, deciding against the assessee. The Tribunal held that the right to receive compensation, including enhanced compensation and interest, is an asset within the meaning of the Wealth-tax Act and is exigible to wealth-tax.2. Debt Owed on Account of Land Acquisition:The assessee contended that the amount of Rs. 6,71,865, held as debt on the valuation date, was subject to the risk of appeal and thus should not be considered an asset. The Tribunal upheld the lower authorities' decision, referencing the Supreme Court's ruling in Col. Sir Harinder Singh Brar Bans Bahadur's case, which treated the amount received as compensation as debt owed by the assessee. The Tribunal directed the Wealth-tax Officer (WTO) to re-calculate the wealth of the assessee, giving benefit arising from the Supreme Court's order.3. Air Field in Faridkot:The issue concerning the valuation of the Air Field in Faridkot was set aside and restored to the file of the WTO for re-adjudication, following the Tribunal's previous decision in Smt. Badhurani Deepinder Kaur's case.4. Reviera Flats, Delhi:The assessee argued that the Reviera Flats did not belong to him as no proper conveyance of sale was executed and registered. The Tribunal discussed the relevant documents and Supreme Court rulings, concluding that the flat did not belong to the assessee within the meaning of section 2(m) of the Wealth-tax Act. Consequently, the Tribunal set aside the valuation of the flat at Rs. 1,50,000 and ruled in favor of the assessee, holding that the flat was not exigible to wealth-tax.5. Okhla Plot, Delhi:Similar to the Reviera Flats issue, the assessee contended that the Okhla Plot did not belong to him as no conveyance was executed, and possession was not delivered until 1984. The Tribunal, applying the same reasoning as for the Reviera Flats, held that the Okhla Plot did not belong to the assessee within the meaning of section 2(m) of the Wealth-tax Act and was not assessable to wealth-tax.6. Additional Wealth-Tax on Urban Property:The assessee's plea regarding additional wealth-tax on urban property was not pressed during arguments. The Tribunal noted that the plea was in the form of a prayer already addressed while disposing of other grounds of appeal.7. Valuation of Trees:The Tribunal found that the WTO's estimation of the value of trees at Rs. 20,00,000 lacked a reasonable basis and proper analysis. The issue was set aside and referred back to the Assessing Officer for a detailed and reasoned valuation of the trees.8. Hotel Site, Chandigarh:The assessee contended that the Hotel Site in Chandigarh did not belong to him as no proper conveyance of sale was executed, and the plot was resumed on various valuation dates. The Tribunal, applying the same reasoning as for the Reviera Flats, held that the Hotel Site did not belong to the assessee within the meaning of section 2(m) of the Wealth-tax Act and was not exigible to wealth-tax.Conclusion:The Tribunal partly allowed the assessee's appeal, modifying the orders of the lower authorities accordingly. The valuation of claims in pending litigation and the debt owed on account of land acquisition were upheld against the assessee. The issues concerning the Air Field, Reviera Flats, Okhla Plot, and Hotel Site were decided in favor of the assessee, setting aside the valuations and holding that these properties were not exigible to wealth-tax. The valuation of trees was referred back to the Assessing Officer for re-evaluation. The additional wealth-tax on urban property was not pressed and thus not addressed separately.