1985 (9) TMI 117 - AT - Wealth-tax

Tribunal Upholds CIT(A)'s Orders on Property Valuation, Wealth Exclusion

EIGHT WEALTH TAX OFFICER. Versus JEETENDRA KAPOOR.

EIGHT WEALTH TAX OFFICER. Versus JEETENDRA KAPOOR. - TTJ 025, 318, Issues Involved:1. Condonation of delay in filing cross objections.2. Valuation of immovable property at Pali Hill.3. Inclusion of voluntarily disclosed amount of Rs. 66,620 in net wealth.4. Inclusion of outstanding professional fees as assets.5. Valuation and inclusion of annuity policies in net wealth.Detailed Analysis:1. Condonation of Delay in Filing Cross Objections:The cross objections by the assessee were filed late, and an application for condonation of the delay was submitted. It was argued that the points raised became relevant only after certain Tribunal decisions. The Tribunal condoned the delay and admitted the cross objections after hearing the parties.2. Valuation of Immovable Property at Pali Hill:The Department objected to the reduction in the value of the Pali Hill property. The property was sold to M/s Gautam Builders for development, and the assessee was allotted flats and a cottage in return. The valuation of the property for the assessment years 1973-74 and 1974-75 was returned at Rs. 5,96,780, and for the years 1975-76 to 1978-79 at Rs. 7,73,050. The WTO referred the valuation to the Department Valuer, who provided higher valuations. The CIT(A) re-evaluated the property considering the nature of the asset and found discrepancies in the Department Valuer's valuation. The CIT(A) directed a revaluation based on the actual possession and ownership status of the property during the relevant years. The Tribunal upheld the CIT(A)'s detailed valuation and found no reason to interfere.3. Inclusion of Voluntarily Disclosed Amount of Rs. 66,620 in Net Wealth:The WTO included the voluntarily disclosed amount of Rs. 66,620 as an extra asset in the net wealth. The CIT(A) found that this amount represented expenditures on repairs and modifications to the Pali Hill property and directed that it should not be included in the net wealth. The Tribunal confirmed this order, endorsing the CIT(A)'s appreciation of the nature of the voluntary disclosure.4. Inclusion of Outstanding Professional Fees as Assets:The WTO included outstanding professional fees as assets. The CIT(A) estimated the market value of these fees at 50% of the outstanding amounts. The Department argued that the full value should be included, while the assessee contended that not all amounts would be realized. The Tribunal noted that the Supreme Court had settled the assessability of such amounts but emphasized that each outstanding fee should be evaluated based on its recoverability. The Tribunal found the CIT(A)'s estimate of 50% reasonable and upheld it.5. Valuation and Inclusion of Annuity Policies in Net Wealth:The assessee received annuity policies as part of remuneration, which the WTO included in the net wealth. The CIT(A) held that the policies should be included but found the WTO's valuation method incorrect. He suggested a valuation of 10% of the total amount to be received before vesting and 15% after vesting. The Department challenged this, while the assessee argued that the policies should not be included based on Tribunal decisions. The Tribunal referred to the Supreme Court's decision and found that the policies, which could not be surrendered or commuted, fell under the exemption in s. 2(e)(iv) of the WT Act. Consequently, the Tribunal directed the deletion of the entire value of the policies from the wealth tax assessment.Conclusion:The Tribunal dismissed the Department's appeals and partly allowed the assessee's cross objections, upholding the CIT(A)'s detailed orders on the valuation of the Pali Hill property, the exclusion of the voluntarily disclosed amount, the estimation of outstanding professional fees, and the exclusion of annuity policies from the net wealth.