TaxTMI 
TaxTMI 
2016 (9) TMI 1139
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....and which according to the assessee in view of the Urban Land (Ceiling & Regulation) Act, 1976 (for short, 'ULCAR Act') came into force w.e.f. 17/02/1976 and applicable in the State of Raj. On 09/03/1976 & any person holding excess land under the ULCAR Act was required to surrender to the State Govt. The valuation date being 31/03/1976 and 31/03/1977, the assessee in the return of wealth valued 18000 sq. mt. of land at Rs. 1,16,000/- and it was claimed by the assessee in the return of wealth that "since the land has come under ULCAR Act, its value has been depressed". However, the Assessing Officer (for short, 'AO') observed in the assessment order that the compensation under the ULCAR Act has not been declared and accepted by the assessee and therefore, the AO assessed the value of the land for both the assessment years of Rs. 2,98,000/- which was noticed in the earlier assessment years. 3. The matter was assailed before the Commissioner of Income Tax (Appeals) (for short, CIT(A)') before whom it was reiterated that the Government of India restricted the area of the open vacant land by a person to be 2000 sq. mt. in so far as district Ajmer is concerned where ....
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....assessment years and taking into consideration the escalation, the valuation of land could be much higher but the Tribunal determining the market value at a figure of only Rs. 5/- per sq. mt. is unjust and further contended that it is not that in every case only Rs. 5/- per sq. mt. has to be adopted and the ULCAR Act provides that the maximum compensation could be at Rs. 2 lac and therefore, in the alternative, she contented that the value is required to be assessed of the excess land maximum at Rs. 2 lac and not Rs. 5/- per sq. mt. or say Rs. 80,000/-. 7. Per-contra, ld. counsel for the assessee contended that the ULCAR Act mandated that every person holding vacant land, in excess of the ceiling limit, was required to file a statement before the competent authority and once it became a law, everyone was duty bound to follow the same in letter & spirit and accordingly, one has to file a declaration to the competent authority. Under the Wealth Tax Act, on valuation date, fair market value is required to be assessed and the fair market value being not more than Rs. 5/- per sq. mt. in accordance with provisions of the ULCAR Act, the Tribunal came to a correct conclusion. He relied up....
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.... justification left under the ULCAR Act. 11. Under the Wealth Tax Act fair market value of a property is required to be taken into consideration on the valuation date and admittedly, ULCAR Act came into force on or before the valuation date i.e. 31.3.1976 relevant for the assessment year 1976-77 and the ULCAR Act in the relevant year being in force, the value of an asset after the ULCAR Act having come into force indeed got depressed as none would have agreed to purchase land which was under the ULCAR Act. In fact, the ULCAR Act prohibits a person to sale or alienate or gift the property after the ULCAR Act having come into force. The value is required to be noticed on the date when the ULCAR Act came into force. Section 11 of the ULCAR Act further provides that :- 11. Payment of amount for vacant land acquired.-- (1) Where any vacant land is deemed to have been acquired by any State Government under sub-section (3) of section 10, such State Government shall pay to the person or persons having any interest therein,-- (a) in a case where there is any income from such vacant land, an amount equal to eight and one-third times the net average annual income actually derived from s....
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....al Government or the State Government, as the case may be; or (ii) the terms of such grant, lease or other tenure provide for payment of any amount to such person on such termination and resumption, then,-- (a) in a case falling under clause (i), no amount shall be payable in respect of such vacant land under sub-section (1); and (b) in a case falling under clause (ii), the amount payable in respect of such vacant land shall be the amount payable to him under the terms of such grant, lease or other tenure on such termination and resumption or the amount payable to him under sub-section (1), whichever is less. (6) Notwithstanding anything contained in sub-section (1) or sub-section (5), the amount payable under either of the said sub- sections shall, in no case, exceed two lakhs of rupees. (7) The competent authority may, by order in writing, determine the amount to be paid in accordance with the provisions of this section as also the person, or, where there are several persons interested in the land, the persons to whom it shall be paid and in what proportion, if any. (8) Before determining the amount to be paid, every person interested shall be given an opportunity to ....
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.... observations made by the Apex Court in Para 29-31 which reads ad-infra:- "29. The combined effect of the aforesaid provisions, in the context of instant appeals, is that the vacant land in excess of ceiling limit was not acquired by the State Government as notification Under Section 10(1) of the Ceiling Act had not been issued. However, the process had started as the Assessee had filed statement in the prescribed form as per the provisions of Section 6(1) of the Ceiling Act and the Competent Authority had also prepared a draft statement Under Section 8 which was duly served upon the Assessee. Fact remains that so long as the Act was operative, by virtue of Section 3 the Assessee was not entitled to hold any vacant land in excess of the ceiling limit. Order was also passed to the effect that the maximum compensation payable was Rs. 2 lakhs. Let us keep these factors in mind and on that basis apply the provisions of Section 7 of the Wealth Tax Act. 30. The Assessing Officer took into consideration the price which the property would have fetched on the valuation date, i.e. the market price, as if it was not under the rigors of Ceiling Act. Such estimation of the price which the a....
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.... only excess land but other part of the land which would have remained with the Assessee in any case. Therefore, the valuation of the excess land, which is the subject matter of Ceiling Act, would be Rs. 2 lakhs. To that market value of the remaining land will have to be added for the purpose of arriving at the valuation for payment of Wealth Tax. The question formulated is answered in the aforesaid manner." 16. Gujarat High Court in the case of Aims Oxygen Pvt. Ltd. Vs. Commissioner of Wealth-Tax: :(2012) 251 CTR 19 (Guj.), after analyzing the judgments not only of various High Courts but also the Apex Court, observed ad-infra:- "On the aforesaid facts, as it is evident that the land in question was declared surplus land under the Urban Land [Ceiling & Regulations] Act, 1976 which was having depressing effect on the value of the asset, the valuation had to be made on the basis of assumption that the purchaser would be able to enjoy the property as the holder, but with restrictions and prohibitions contained in the ULC Act and in such case value of the property or land would be reduced. Following the same principle, the Revenue, having already accepted the depressed valuation du....