TaxTMI 
TaxTMI 
2005 (5) TMI 277
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....that assessee is a sick industrial company and the company made a reference to Board of Industrial Financial Reconstruction (in short BIFR) under section 15 of the Sick Industrial Companies (Special Provisions) Act in May, 1993. It seems that properties were pledged with financial institutions and banks and some restrictions were imposed by the BIFR for alienation of the properties. These properties consisted of factory buildings and vacant land appurtenant thereto, guest houses with land appurtenant thereto and vacant lands. 4. According to the ld. AR, number of schemes were sanctioned by BIFR from time to time to rehabilitate the company and under such schemes directions were given to the promoters to bring further investments, which promoters failed to bring. In this background, the company ultimately made a proposal to sell some of its immovable properties and bring monies to rehabilitate the company. Such proposal was initially rejected by the BIFR by its order dated 24-2-2003 against which an appeal was filed before the appellate authority, which also confirmed the rejection. Further appeal was filed before the Hon'ble Madras High Court and Hon'ble High Court directed the ....
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.... tax on which construction of a building is not permissible under any law for the time being in force in the area in which such land is situated. He further submitted that according to sections 48 and 49 of The Tamil Nadu Town & Country Planning Act, 1971 wherein it specifically provided that no person other than any State Government or Central Government will erect any building except with the written permission of the appropriate planning authority and in accordance with the conditions. He admitted that some of the lands had already been converted into stock-in-trade and no such permission has been granted by the appropriate authority under the Act. He pointed out that in the Tamil Nadu Town & Country Planning Act, 1971, in sections 48 and 49, the term used is "permissible" and not the term "prohibited", which means that such lands cannot be subjected to wealth-tax unless permission has been given by the authorities because permissible would mean that permission is a prerequisite and prohibition would refer to total ban on construction, e.g., in Coastal Regulation Zone. Other detailed submissions were also made in respect of individual properties, which we shall discuss separatel....
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....nverted most of the lands into stock-in-trade. Perhaps, this step was taken to save income-tax on capital gains because appreciation in the stock-in-trade on account of properties has been adjusted against the normal business losses. But it also shows that assessee was having clear intention to save such lands and such intention can be found only if there were surplus vacant lands. He submitted that though there is a provision for exemption of stock-in-trade, but this limit was originally fixed at 3 years from the date of acquisition by the Finance Act, 1993 and the limit of 3 years was extended to 5 years by the Finance Act, 1994, w.e.f. 1-4-1995 and it was further extended to 10 years by Finance (No. 2) Act, 1998, w.e.f. 1-4-1999; which means that for the assessment year 1993-94, the limit was only three years and upto assessment year 1998-99 the limit was 5 years. At this juncture, a specific query was posed by the Bench that why lands were converted into stock-in-trade and the ld. counsel of the assessee admitted that the conversion was done with a view to sell these lands, because assessee company was suffering business losses. 7. After considering the rival submissions car....
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....ion when something is allowed after taking appropriate permission. In that sense, there was no prohibition on construction and it was very much permissible. Had the assessee sought permission, same would have been given as per guidelines of Local Authorities and thus construction was very much possible. Clause (b) of section 2(ea) to the Wealth-tax Act defines "urban land" and excludes only those lands where construction of a building is not permissible under any law and the provisions of the Tamil Nadu Town and Country Planning Act, 1971, relied on by the ld. AR are not of much help because, construction is very much permissible. There may be some controversy in respect of whether such lands can be called as urban lands or not, when some buildings have been constructed on a small plot of land. E.g., in case of Rother House, Bangalore, constructed area is only 611 sq.ft. whereas the plot area is 79,280 sq.ft. Similarly, in case of Boat Club Road, Chennai, the constructed area is only 3,369 sq.ft. whereas the total area of the plot is 63,168 sq.ft. Now let us examine rule 6 and rule 8 of Schedule III to Wealth-tax Act, 1957, which reads as under:- "6. Adjustments to value arrived....
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....ply,- "(a) where, having regard to the facts and circumstances of the case, the Assessing Officer, with the previous approval of the Deputy Commissioner, is of opinion that it is not practicable to apply the provisions of the said rule to such a case; or (b) where the difference between the unbuilt area and the specified area exceeds twenty per cent of the aggregate area; or (c) where the property is constructed on leasehold land and the lease expires within a period not exceeding fifteen years from the relevant valuation date and the deed of lease does not give an option to the lessee for the renewal of the lease, and in any case referred to in clause (a) or clause (b) or clause (c), the value of the property shall be determined in the manner laid down in rule 20." 8. As has been pointed out by the ld. DR, in most of the cases, difference between the unbuilt area and specified area exceeds 20 per cent and therefore such properties have to be valued on the basis of rule 20 as prescribed under rule 8. Rule 20 reads as under:- "20. Valuation of assets in other cases.- (1) The value of any asset, other than cash, being an asset which is not covered by rules 3 to 19, ....
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....d as industrial land as well as stock-in-trade at the same time. We also find that in the later years some of these lands have actually been sold without selling a particular building and/or along with buildings. In these circumstances, such lands have to be held as surplus urban vacant lands. 11. As far as individual properties are concerned, we shall discuss the same in detail while dealing with the each property individually. (ii) Whether deduction of debt claimed is permissible under the provisions of the Wealth-tax Act?" 12. The ld. AR submitted that assessee company has lot of liabilities and such debts are secured by way of equitable mortgage of immovable properties and therefore same should have been allowed to be deducted as liability. 13. On the other hand, the ld. DR submitted that properties owned by the assessee have been brought to charge of wealth-tax after assessment year 1993-94 and section 2(m) of the Wealth-tax Act also stood amended w.e.f. 1-4-1993 and it clearly lays down that only those assets can be deducted, which have been incurred in relation to the said assets. The properties owned by the assessee have been acquired for a very long period and ....
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....ve months on the valuation date. Explanation 1: A building or part thereof referred to in clause (iii), clause (iiia) or clause (iiib) of section 27 of the Income-tax Act shall be includible in the net wealth of the person who is deemed under the said clause to be the owner of that building or part thereof. Explanation 2: Where a debt falling under sub-clause (ii) is secured on, or has been incurred in relation to, any asset which is not to be included wholly or partly in the net wealth by virtue of the provisions of sub-section (1A) of section 5, the amount of such debt shall, for the purposes of the said sub-clause, be limited to the value of the said asset which is not includible in the net wealth under sub-section (1A) of section 5." 16. A plain reading of the section makes it clear that net wealth has been defined in the section and the same means amount by which aggregate value of all the assets belonging to the assessee on the valuation date is in excess of value of all the debts owed by the assessee which have been incurred in relation to the said assets. This clearly shows that only those debts can be deducted which have been incurred in relation to the assets, wh....
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.... 2003 for Rs. 62.10 crores, which works out to Rs. 205 per sq. ft. The guideline value for this property was Rs. 550 per sq.ft. and in this respect he referred to the guidelines issued by the Sub-Registrar Office Website. Therefore, property was sold at 37.28 per cent of the guideline value and thus same value may be adopted for valuation of various properties. 18. On the other hand, the ld. DR while supporting the order of the Assessing Officer, where he has relied on the decision of Hon'ble Supreme Court in case of Purshottam N. Amarsay v. CWT [1973] 88 ITR 417 and Ahmed G.H. Ariff v. CWT [1970] 76 ITR 471, where it was held that when section 3 imposed a charge on wealth-tax under the net wealth, it necessarily includes in its ambit property of every description. He submitted that it is not necessary that property should be actually sold in the market, but only a hypothetical situation has to be contemplated, where it should be assumed that there existed open market for sale of such an asset. He referred to various clauses of BIFR order and submitted no restriction as such was imposed on the sale of properties. Only certain procedures were prescribed and such sale could be con....
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....94, which contained the following clauses: "(1) The scheme envisages restructuring of the company by hiving all the Engineering Division and Process House into two separate companies, viz., Binny Engineering Works Limited and Binny Processors Limited, modernization of the Textile Division with labour rationalisation, development and sale of real estate properties besides one-time settlement of dues of the banks and limitations with the association of new promoters (M/s. Dynamix Group). (2) To vacate the charge on the non-factory lands and buildings, held in fixed assets/stock-in-trade by the company proposed to be developed by its Real Estate Division, in a scheduled manner and in proportion to the amount received to enable the company to develop the property, enter into sale agreement with the prospective customer which would be possible only when the title is clear. (3) To constitute an asset sale committee comprising nominees of State Government of Tamil Nadu and Karnataka, nominees of IDBI and SBI, two representatives of Management and Special Director appointed by the BIFR to monitor sale of real estate properties and utilisation of sale proceeds". Therefore, the c....
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....ft.) Source : Tamilnadu Sub-Registrar Office Website www.tnreginet.net" From the above, it is clear that the value quoted by the Sub-Registrar is not authentic and the same cannot be cited as an authority. Moreover, it refers to rates adopted for normal residential buildings and it is not clear whether the same are only for the building or for a piece of land and therefore, we are unable to consider the same. In any case, in most of the cases, assessee has himself filed valuation certificate from the Registered Valuers for the purpose of income-tax, which has been adopted by the assessing authority with suitable reduction if the valuation relates to later years. In these circumstances, we think generally values adopted by the assessing authority on the basis of valuation certificate of registered valuer or valuation estimated by DVO, against which no defect was pointed out by the ld. counsel by the assessee, were rightly adopted. 22. We are not dealing with the valuation of individual properties at this juncture, because we think the same should be dealt while adjudicating appeals for various years and now therefore, we take up adjudication of appeals for various years. ....
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....; Rs. 18,98,44,844 Chiddingstone Guest House Rs. 72,462 Rother House Guest House Rs. 1,96,20,000 Strathern Guest House Rs. 86,15,218 ----------------- &....
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....which was not produced before the Assessing Officer regarding vacant land in Magadi Road being leased out to Hindustan Petroleum Corporation Ltd. (4) The CIT(A) has erred in directing the Assessing Officer to exclude the value of urban land claimed to be stock-in-trade from the assessable wealth. (5) The CIT(A) erred in deleting the entire addition to the value of surplus land, in excess of land occupied by buildings." 29. Ground (1): This issue has already been discussed by us while deciding the principal issues, where we have observed that there is no restriction on sale of properties by the BIFR and hence there could be no diminution in the value of the property and therefore, this ground is decided in favour of the Revenue. 30. Ground (2): This issue has also been decided by us while discussing the principal issues. The ld. CWT (Appeals) has reduced the value of guest houses on the basis of the decision of the Hon'ble Gujarat High Court in the case of CWT v. Shirinbanoo [1976] 102 ITR 735. In this case, it was held, "it is no doubt true that for purposes of determining the net wealth which is the basis of the liability of wealth-tax, the amount by which the aggregat....
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....was let out at Rs. 1,000 per month. 34. After considering the rival submissions, we find that the application of Schedule III has been held to be mandatory and even on retrospective basis by the Hon'ble Supreme Court in the case of Bharat Hari Singhania v. CWT [1994] 207 ITR 1. Once the property has been let out, the same has to be valued on the basis of Schedule III. However, there is some controversy regarding rent and municipal taxes and therefore, we set aside the order of the CWT (Appeals) and direct Assessing Officer to value this property as per Schedule III on the basis of rent capitalization method, after verifying the details of rent and municipal taxes. 35. Ground (4): During the assessment proceedings. Assessing Officer noticed that assessee was holding several plots of land, which were treated as stock-in-trade by the assessee. As these lands were converted into stock-in-trade in the year 1982 and as per original provision under section 2(ea) of the Wealth-tax Act, 1957, the exemption was available only for three years. Since the time of three years has lapsed long back, the value of these properties which comprised of Ashwell Maidan, Boat Club Road, Baider Halli....
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...."urban land" means land situate- (i) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the valuation date; or (ii) in any area within such distance, not being more than eight kilometres from the local limits of any municipality or cantonment board referred to in sub-clause (i), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette, but does not include land on which construction of a building is not permissible under any law for the time being in force in the area in which such land is situated or the land occupied by any building which has been constructed with the approval of the appropriate authority or any unused land held by the assessee for industrial purposes for a period of two years fro....
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....on of the assessee was to sell the same. Similarly, the Joint School Compound property, Binnyfields property and Binnystone Gardens property was also converted into stock-in-trade in the financial year 1981-82 and it was admitted that the intention was to sell the same. Once the assessee has the intention of selling these surplus lands and was treating the same as stock-in-trade, then as discussed in the above noted grounds, we hold that the same cannot be treated differently for wealth-tax purposes. In these circumstance, we set aside the order of the ld. CWT (Appeals) and restore that of the Assessing Officer. 42. In the result, the appeal is partly allowed. WTA 64/2000 assessment year 1994-95 (Department's appeal) 43. In this appeal, the following effective ground has been raised:- "2.1 The CIT(A) has erred in admitting fresh evidence which was not produced before the Assessing Officer regarding vacant land at Magadi Road being leased out to Hindustan Petroleum Ltd." 44. This issue has been decided by us while adjudicating WTA No. 47/2000, wherein the matter was set aside to the file of the Assessing Officer and following the same, this issue is set aside to the f....
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....operties were demolished pursuant to a joint development agreement on 21-3-1995 with HMG Engineering Pvt. Ltd. from whom Rs. 6 crores was received as consideration for granting them the right to develop these properties and to take 50 per cent of the net profit on the sale of the developed property. From these submissions, it becomes clear that the properties were never transferred by assessee company and it still keeps on enjoying rights on these properties in the current year. The Assessing Officer has adopted the value of Boat Club Road guest house on the basis of sale agreement filed while obtaining certificate under section 230A in December, 1995 after suitable discount. In case of Rother House the value has been adopted as per the registered valuer's report submitted by the assessee for the assessment year 1993-94 after enhancing the same on the basis of cost inflation index notified by the Government. In case of Strethern Guest House, the value has been adopted on the bass of the value of adjacent property. We think that this is very correct criteria adopted by the Assessing Officer for valuation of such properties and the ld. CWT (Appeals) has correctly confirmed the same. ....
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....ssing Officer concluded the same remained with the assessee on valuation dated 31-3-1994 and 31-3-1995. After-allowing 10 per cent discount, value of the same was taken at Rs. 14,67,57,000 and Rs. 13,20,81,000 for assessment years 1995-96 and 1994-95 respectively. 57. The CWT (Appeals) noted that this property basically consisted of 26.29 grounds and built up area was only 5,550 sq. ft. Out of the above, 10 grounds were converted into stock-in-trade in 1982. Out of 10 grounds treated as stock-in-trade, 8 grounds were sold to India Cement Ltd. on 12-7-1986. After this sale, only 2 grounds were let from the converted stock-in-trade. Thus the balance of 16.79 grounds of land and building having built up area of 5,550 sq. ft. were treated as fixed assets. During assessment year 1996-97, assessee sold the entire land consisting of 18.79 grounds including the building (which includes 2 grounds converted into stock-in-trade, which remained unsold earlier) for a consideration of Rs. 16.30 crores. 58. The CWT (Appeals) held that 16.79 grounds have to be treated as business assets under section 2(ea)(i)(3). However, 2 grounds which were converted into stock-in-trade were directed to be....
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.... 60. In the result, the appeal is dismissed. WTA 50/Mds/2000 assessment year 1995-96 (Assessee's appeal) 61. In this appeal, assessee has raised the following grounds:- "(1)(a) The Commissioner of Income-Tax (Appeals) erred in holding that the guest houses were assessable to wealth tax. (b) He should have found that these assets were transit houses and being used for purpose of business was not assessable to wealth tax. (c) Without prejudice to the above claim the Appellant submits that in any event the Commissioner of Income-Tax (Appeals) should have held that in view of the fact that the difference between the unbuilt area and specified area did not exceed 20 per cent of the aggregate area the value should be in accordance with Rule 3 of Schedule III to Wealth-tax Act. (d) The Commissioner of Income-tax (Appeals) erred in confirming that the value of these assets should be made without reducing the value of debts. (2) The Commissioner of Income Tax (Appeals) erred in confirming that the value of the following assets should be included in the net wealth though these assets had been transferred and were not in existence on the date of valuation. (a) Rother G....
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....ving been used for industrial purpose does not lose its character merely because it has been considered as stock-in-trade in the books. (3) The Commissioner of Income-tax (Appeals) erred in confirming the inclusion of a portion of the Varindavan Property in the net wealth at the estimated market value of Rs. 1,52,70,879." 68. Ground Nos. 1 & 2- After hearing both the parties, we find that these issues have already been decided by us against the assessee while adjudicating the assessee's appeal for the assessment year 1993-94 as well as the principal issues. Therefore, these issues are decided against the assessee. 69. Ground No. 3- This issue shall be considered by us while considering the Revenue's appeal for this year in WTA 51/Mds/2003 where we have confirmed the order of the ld. CWT (Appeals). 70. In the result, the appeal is dismissed. WTA 51/Mds/2003 assessment year 1995-96 (Revenue's appeal) 71. In this appeal, the Revenue has raised the effective issue of taxability of 16.79 grounds of property known as Vrindavan. This issue has been discussed by us in detail in the above noted paragraphs while deciding the Revenue's appeal for the assessment year 1994-95,....
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....ecided against the assessee. 76. In the result, the appeal is dismissed. WTA 66/Mds/2000 assessment year 1996-97 (Revenue's appeal) 77. In this appeal, the Revenue has raised the only effective ground as under:- "The CIT(A) has erred in admitting fresh evidence which was not produced before the Assessing Officer regarding vacant land at Magadi Road being leased out to Hindustan Petroleum Ltd." 78. This issue has been decided by us while adjudicating WTA No. 47/2000 for assessment year 1993-94, wherein the matter was set aside to the file of the Assessing Officer and following the same, this issue is set aside to the file of Assessing Officer with identical directions. 79. In the result, the appeal is allowed for statistical purposes. WTA 58/Mds/2003 assessment year 1996-97 (Assessee's appeal) 80. In this appeal, assessee has raised the following grounds of appeal:- "(1)(a) The Commissioner of Income-tax (Appeals) erred in confirming the inclusion of the property at Ashwell Maidan, Chennai held as 'stock in trade', at the estimated market value, in the computation of net wealth. (b) The Appellant submits that the valuation of the property, which was enc....
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....perty, if the value of this property is included in the net wealth of the assessee. In this background, we set aside this issue to the file of the Assessing Officer for re-examination of the issue, after going through the details of agreement entered into with Somdutt Builders and decide the issue in the light of the observations made by us. 87. In the result, the appeal is allowed for statistical purposes. WTA 19/Mds/2001 A.Y. 1997-98 (Assessee's appeal) 88. In this appeal, assessee has raised the following grounds:- "1(a) The Commissioner of Income Tax (Appeals) erred in holding that the guest houses were assessable to wealth tax. (b) He should have found that these assets were transit houses and being used for purpose of business was not assessable to wealth tax. (c) Without prejudice to the above claim the appellant submits that in any event the Commissioner of Income Tax (Appeals) should have held that in view of the fact that the difference between the unbuilt area and specified area did not exceed 20 per cent of the aggregate area the value should be in accordance with Rule 3 of Schedule III to Wealth-tax Act. (d) The Commissioner of Income-tax (Appeals)....
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....s 6 & 7, it has been submitted that these lands have been converted into stock-in-trade. However, even if it is assumed that these lands were not converted into stock-in-trade, even then they have been rightly charged to tax by the lower authorities because no claim was made before the Assessing Officer that land was appurtenant to factory premises or canteen premises and was being used for the purpose like parking of the vehicles. It is settled position of law that no fresh claim can be made before the Tribunal for the first time on facts of the case. Since this is a new claim being made for the first time, even decision of the Bangalore Bench in the case of Sree Suryodhaya Industries Ltd. is not of any help to the assessee. We also find from the assessment order that assessee has himself admitted that Vyasarpadi property, Cooks Road property and Tank Bund property is taxable and have shown the value of Rs. 1,52,625, Rs. 9,80,000 and Rs. 21,07,800 respectively. These values were increased by the Assessing Officer to Rs. 1,68,900 and Rs. 10,78,000 in case of Vysarpadi and Cooks Road property by enhancing by 10 per cent since value from Valuation Officer was not available and was aw....
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....ields (v) Binny Stone Garden. (b) The appellant submits that the assets having been used for industrial purpose does not lose its character merely because it has been considered as stock-in-trade in the books. 3. The Commissioner of Income-tax (Appeals) erred in ignoring the debts secured on the assets of the company in computing their value for wealth tax purpose." 99. These issues have been decided while adjudicating the appeals of the assessee and Revenue for the assessment year 1993-94 in the above noted paragraphs and following that order, we decide these issues against the assessee. 100. In the result, the appeal is dismissed. WTA 53/Mds/2003 A.Y. 1997-98 (Revenue's appeal) 101. In this appeal, Revenue has challenged the order of the CWT (Appeals) for deleting the addition amounting to Rs. 13,34,85,000 in respect of Boat Club Road property. 102. Identical issue was raised by the Revenue for the assessment year 1995-96 where the same has been set aside to the file of the Assessing Officer. Following that decision, here also, the issue is set aside to the file of the Assessing Officer with a direction to follow directions given in assessment year 1995-96....
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....emphasized that assessee had received sum of Rs. 6 crores not towards sale consideration, but in consideration paid for entering into joint development with the assessee. In these circumstances, a sum of Rs. 6 crores cannot be called a debt and cannot be reduced from the value of the property. 109. On the other hand, the ld. AR supported the order of the CWT (Appeals). 110. After considering the rival submissions, we find that clause 15 of the development agreement with HMG Engg. Pvt. Ltd. reads as under:- "15. It is repeated for the sake of clarity that the relationship between the parties hereto is as Co-Developer of the said property belonging to the party of the First Part and the right of the party of the Second Part is to receive 50 per cent of the Net Sale proceeds after accounting for expenses. It is however agreed that the amount of land cost and/or premium paid by the party of the Second Part of the party of the First Part shall not be included in the cost incurred by the party of the Second Part and the same is on time premium paid by the party of the Second Part to the party of the First Part which will not be taken into calculation for the purpose of costs. If....
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....at the estimated market value in respect of the following properties: (i) Property at Vyasarpadi, Chennai (ii) Property at Cooks Road, Chennai (iii) Tank Bund Road property, Bangalore (b) He should have found that the value shown in the return was proper. (c) He should also have found that the property at Cooks Road was subject to acquisition by the Tamil Nadu Government. B.(a) The Commissioner of Income-tax (Appeals) erred in valuing of the property at Magadi Road, Bangalore at Rs. 1,00,000. (b) He should have found that there was an embargo on the sale of the property and the value shown in the return was proper. 3.(a) The Commissioner of Income-tax (Appeals) erred in confirming the valuation of the following properties held as stock-in-trade at the estimated market value. (i) Ashwell Maidan, Chennai (ii) Baiderhalli, Bangalore (iii) Hosakere, Bangalore (iv) Nandidurgh, Bangalore. (b) He should have found that the valuation of the property, which was encumbered, cannot be taken at the estimated market value. 4.(a) The Commissioner of Income tax (Appeals) erred in confirming the inclusion in the net wealth, the following lands appurtenant ....
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....ssee. 118. In the result, the appeal is partly allowed. WTA 55/Mds/2003 A.Y. 1999-2000 (Revenue's appeal) 119. In this appeal, Revenue has raised the following effective grounds:- 1. The learned CIT(A) has erred in deleting the addition made in the WT Asst. with regard to the vacant land at Boat Club Road, Chennai amounting to Rs. 13,34,85,000. 2. The learned CIT(A) has erred in directing to allow Rs. 6 crore received by the assessee from M/s. HMG Engineering (P.) Ltd. for development of property at Strathern House, Rother House and Chiddingstone House, Bangalore from the value of the property as a liability. 3. The learned CIT(A) has erred in directing to adopt the value of the Magadi Road property at Rs. 1 lakh. 120. Ground No. (1): As decided in assessment years 1995-96,1996-97 and 1998-99, this issue has been set aside to the file of the Assessing Officer and therefore here also, we set aside this issue to the file of the Assessing Officer with a direction to follow the same directions given for earlier years. 121. Ground No. (2): This issue has been decided by us while adjudicating the Revenue's appeal for assessment year 1993-94 in the above paragraphs....
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.... it speaks about charging assets only of individuals and HUF and not companies. 2. Without prejudice to the above claim that the company is not assessable to wealth-tax, the appellant submits:- (a) The Commissioner of Wealth-tax, Appeals erred in assessing Waterside Area Transit House at Chennai at an estimated market value of Rs. 31,84,03,856, while the asset falls outside the ambit of Wealth-tax Act. (b) The Commissioner of Wealth-tax, Appeals erred in assessing Boat Club Road, vacant land at Chennai at an estimated market value of Rs. 17,62,02,000 while the asset falls outside the ambit of Wealth-tax Act. (c) In any event, the Commissioner of Wealth-tax Appeals should have found that there was an embargo on the sale of the property and adopting market value based on hypothetical sale was not justified. 3.(a) The Commissioner of Wealth-tax, Appeals erred in assessing an amount of Rs. 14,43,65,000 to Wealth tax for the following properties which have been demolished and/are under development as on valuation date: (a) Rother House at Bangalore (b) Strathern House at Bangalore (c) Chiddingstone Transit House. (b) The Commissioner of Wealth-tax should have ....
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....; 1,40,33,241 Hosakere Road, Bangalore 1,08,19,160 Nandidurgh Road, Bangalore 82,23,600 (b) The appellant submits that the valuation of the property, which is encumbered, cannot be taken at the value of a property, which is free from encumbrance. 7. The Commissioner of Wealth-tax, Appeals erred in including the net wealth the value of land appurtenant to building used as factories, canteens, administrative office and work place at an estimated market value. 8. The Commissioner of Wealth-tax, Appeals erred in ignoring the debts secured on the assets of the company in computing their value for wealth tax purpose." 128. Ground No. (1): The ld. AR reiterated the grounds of appeal. On the other hand, the ld. DR submitted that it is clear from the provisions of the Wealth-tax Act that the assesses company is assessable to wealth-tax and therefore grounds raised by the assessee are totally misplaced and misconceived. 129. After cons....
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....as the case may be, principal office of the company, corporation, institution, association or body] in all cases is in India; The appellant being a company formed and registered under the Companies Act, 1956, it has to be treated as an Indian company and therefore it squarely comes under the definition of section 2(17) of the Income-tax Act and therefore it is exigible to wealth tax. The definition under section 2(18) is for the phrase "company in which the public are substantialy interested" and it has no relevance to the case of the appellant." 130. We think the ld. CWT (Appeals) has correctly decided this issue, because section 3, which is the charging section, very clearly includes companies also in its ambit and therefore wealth-tax provisions are applicable in case of companies also. In these circumstances, we find nothing wrong with the order of the ld. CWT (Appeals) and confirm the same. 131. Ground Nos. (2) to (7): These issues are discussed by us while adjudicating the principal issues as well as the grounds raised in various appeals and all these issues have been rejected by us in the above noted paragraphs and following the same, we reject these grounds. 132....