Income Tax Appellate Tribunal - Hyderabad
Syed Hameeduddin, Hyderabad vs Asst. Commissioner Of Wealth Tax, ... on 4 October, 2021
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD 'A' BENCH : Hyderabad
(Through Video Conference)
Before Smt. P. MADHAVI DEVI, Judicial Member
and
Shri L.P. SAHU, Accountant Member
WTA Nos. 02 & 03/Hyd./2018
Assessment Years: 2009-10 & 2010-11
Syed Hameeduddin Vs. ACWT, Circle 9(1)
Hyderabad Hyderabad
[PAN: AAHPH7931E]
(Appellant) (Respondent)
For Assessee: Shri B. Satyanarayana Murthy, AR.
For Revenue: Smt. N. Esther, D.R.
Date of Hearing : 03/08/2021
Date of Pronouncement : 04/10/2021
ORDER
PER L.P. SAHU, A.M.
These two appeals have been filed by the assessee against the consolidated order passed by the CWT(A)-7 Hyderabad order dated 21.11.2017 in appeal no. 0442 and 0443/2016-17 on the following grounds of appeal.
WTA Nos. 2 & 3/Hyd/2018 AYs: 2009-10 and 2010-11 Sri Syed Hameeduddin
1. The Order of the Hon'ble Commissioner of Wealth Tax (Appeals) is contrary to the facts of the case and provisions of law.
2. The Hon'ble Commissioner of Wealth Tax (Appeals) is not justified in sustaining the values of Rs.2,16,29,000/- and Rs.2,27,10,000/- as Fair Market Value of the property at I T Park, Hi-tech City, for Wealth Tax Assessment Years 2009-10 and 2010-11 respectively. He should have appreciated that the property is given on development for construction of a complex and in view of the same the value of the property cannot be included' as an asset as per provisions of Section 2(ea) of the Wealth Tax Act. The assessment owned by the Applicant is right to relieve the constructing area as per the Development Agent.
3. The Hon'ble Commissioner of Wealth Tax (Appeals) is not justified in sustaining the Order of the Wealth Tax Officer in adopting a value of Rs.7,36,72,800/- -and Rs.8,83,87,300/- as value of the property at Survey No.83/1, Raidurg Panmakta, Gachhibowli, Serilingampally for the Wealth Tax Assessment Years 2009-10 and 2010-11 respectively. He should have appreciated that the land in question is under litigation in view of the fact that there are number of claimants to the ownership of the property. The Hon'ble Commissioner of Income Tax should have appreciated that the a has not been able to enjoy the property in view of the litigation.
4. The Hon'ble Commissioner of Wealth Tax (Appeals) should have directed the Wealth Tax Officer to allow an amount of Rs.4,04,33,725/- and Rs.4,27,56,129/- further Assessment Years 2009-10 and 2010-11 respectively the debts secured, against the properties in question.
5. The Hon'ble Commissioner of Wealth Tax (Appeals) is not justified in holding that the Taxability of the asset under the Wealth Tax Act is not before the Assessing Officer. He should have appreciated the issue of Taxability is a legal issue and therefore it can be raised even at the stage of reassessment.
6. The Hon'ble Commissioner is not justified in sustaining the Order of the Assessing Officer who had adopting the full value of the property in respect of property at Rayadurg whereas only part consideration was paid.
7. The Hon'ble Commissioner is not justified in sustaining the action of the Income Tax Officer in adopting the incomplete valuation report, which was supported by a detailed valuation report received by him only after the completion of the assessment.
2WTA Nos. 2 & 3/Hyd/2018 AYs: 2009-10 and 2010-11 Sri Syed Hameeduddin
8. The Hon'ble Commissioner is not justified in sustaining the values on the basis of a stray sale of property in the face of the lower sale rates of the property at Rayadurg.
For these and other grounds, that may be raised at the time of hearing, it is prayed that the Orders of the lowering authorities be set aside or modified as may be deemed fit.
Since the grounds in both the appeals are similar, therefore, we reproduced the above grounds for AY 2009-10 and the decision of this AY shall apply mutatis mutandis for the AY 2010-11.
2. The brief facts of the case are that a notice u/s 17 of the Wealth Tax Act issued on 29.102010. The assessee filed wealth tax return on 5th December, 2011 admitting net wealth (-) Rs.3,06,64,525/- whereas the Assessing officer completed the wealth tax assessment u/s 16(3) r.w.s. 24 of Wealth Tax Act determining the taxable wealth of Rs.10,68,16,317/- .
2.1. This is the second round of proceedings before the Tribunal, earlier the WTA no. was 44 & 45/Hyd/2013 order dated 11th March, 2015 had set aside the assessment made and restored the matter to the file of AO for determining the value of the properties which was not justified in estimating the valuation of the properties of the assessee at IT Park, High tech city and Gachibowli are double the cost of the acquisition by making reference to the Valuation officer. Accordingly the reference was made to the jurisdictional officer and accordingly the Valuation officer made the value of the property which is as under.
3WTA Nos. 2 & 3/Hyd/2018 AYs: 2009-10 and 2010-11 Sri Syed Hameeduddin 7,36,72,800 8,83,87,300 2.2. After issuing the valuation report a letter was issued to the assessee vide DCIT/-9(1)/Valuation/2016-17 dated 2212.2016 with a request to furnish the objections//submissions if any, in response to the which, the assessee submitted reply which is as under.
4WTA Nos. 2 & 3/Hyd/2018 AYs: 2009-10 and 2010-11 Sri Syed Hameeduddin "6.1 As regards the property at Hi-tech City, Kondapur, Hyderabad the A.R. of the assessee has stated that "this property was acquired in the Financial Year 2006. 07 out of borrowed funds and given for construction to a developer in the F. Y. 2007-08. The construction was not taken up by the developer in the F. Y. 2008-09 & 2009-10 relevant to Asst. Year 2009-10 & 2010-11. Even as on today. no construction is taken up by the developer. Copy of the detailed reply vide letter dtd.03-ll-20l6 already submitted is enclosed herewith as ANNEXURE-l. The details of the borrowed funds (along with the loan confirmation letters) which are to be reduced from the property value are enclosed as per ANNEXURE-2 ... however, as per the Judgement delivered by the Punjab & Haryana Court in 2011 in the case of CIT Vs. Smt. Neena Jain, a property which is under construction is not an asset within the meaning of Sec. 2( ea) of the Wealth tax Act, 1957 i.e. it is neither a building nor an urban land within the meaning of Sec.2(ea), hence not chargeable to wealth tax. As such/ we request you/ not to levy wealth tax on it as it is not an asset.
6.2 To cover up all the issues raised by the A.R. of the assessee during the course of present assessment proceedings, it is pertinent to mention that the findings of the Hon'ble ITAT should be binding on us. On going through the Hon'ble ITAT' order at para No.3 page No.2 held that Against the orders passed by A. O. u/s 16(3) r.w.s. 17 of the Act for both the years under consideration, appeals were preferred by assessee before the Ld. CWT( A). In the said appeals, the action of the A.O. in disallowing his claim for deduction on account of loan liabilities was not disputed by assessee and the only dispute that was raised was relating to the disallowance of exemption of three properties and adoption by A. O. of the value of three other properties at double the cost of acquisition. On both these issues, Ld CWT(A) did not find any merit in the appeals of assessee and accordingly confirming the action of the A. O. on these issues, he dismissed the appeals of the assessee."
5WTA Nos. 2 & 3/Hyd/2018 AYs: 2009-10 and 2010-11 Sri Syed Hameeduddin 2.3. After perusing the reply submitted by the assessee the AO observed that there is no merit in the submissions of the assessee and he took the value of the property at IT Park, Hightech city at Rs. 2,16,29,000/- and in case of the second property at Raidurg, Gachibowli valued at Rs. 7,36,72,800/- and completed the wealth tax assessment determining the total taxable net wealth at Rs. 9,53,01,800/-.
3. Feeling aggrieved from the order of the Wealth Tax officer, assessee appealed before the CWT(A) who rejected the appeal of the assessee.
4. Aggrieved from the order of the CWT(A) assessee filed appeal before us. Ld.DR reiterated the submissions made before the authorities below and further submitted that in case of the property situated at Hightech city, Kondapur, a joint development agreement was made with the developer on 4th day of April, 2007 out of borrowed funds and the property was acquired in the F.Y. 2006-07. Once the property was converted as a commercial property, therefore, it is outside the purview of the definition of taxable net wealth u/s 2 (ea) which cease to exist.
Further in respect of other properties, he also referred to paper book page no.22 situated at Gachibowli. He submitted that the property was purchased on two dates i.e. 91.2009 and 15.4.2009 total cost of Rs.5,26,25,516/- therefore the valuation of the property was made by the valuation officer at Rs. 7,36,72,800/- which has been accepted by the Assessing officer is not justified. He also drew our attention to paper book page no.22 that the value of the residential property is Rs. 11,000/- per sq.yard and Rs. 18,000/- for the commercial property, letter has been issued by Sub-Registrar on 26th March, 2016 to the DVO, therefore, the AO is not justified to make at higher side.
5. On the other hand the ld.DR relied on the order of the authorities below and submitted that the authorities below has rightly taken the fair market value of the impugned properties, therefore, the order of the authorities below should not be rejected.
6WTA Nos. 2 & 3/Hyd/2018 AYs: 2009-10 and 2010-11 Sri Syed Hameeduddin
6. After hearing both sides and perusing entire material available on record and orders of authorities below and paper book submitted by the assessee, we observe that in respect of property situated at Kondapur the assessee has made a joint development agreement on 4.4.2007 but the construction was not started till the date of the impugned A.Y. Once the property is converted in the commercial property, it is outside the purview of taxable net wealth of the assessee. We find substance in the submissions of the ld.AR and relying on the judgement by him. Therefore, the addition made by the wealth tax officer is not justified. Further, in respect of the property situated at Raidurg, Gachibowli the property was purchased on 9.1.2009 and 15.4.2009 at a cost of Rs. 5,26,25,560/- and out of which there was unpaid price of Rs.1,76,23,500/-. Therefore, the net amount paid was Rs. 3,15,02,016/- whereas the AO has taken the value at Rs. 7,36,72,600/- which is a very high price within a short span of time. On going through the paper book page 107 we observe that the sub-registrar value and purchase price of the property both are same which has been declared by the assessee, therefore, for the impugned AY 2009-10 the cost price paid by the assessee may be accepted with certain increase in the value of the property for AY 2009-10 as per reconsidered value may be increased @ 10% at the cost price for the AY 2009- 10 and for the AY 2010-11 may be taken at 20%. The valuation made by the VO is not correct because the SRO value is the same as property purchased by the aassessee.
6.1. In the result, the appeal of the assessee is partly allowed.
7. In the result, both the appeals of the assessee are partly allowed.
Order pronounced on 04/10/2021.
Sd/- Sd/-
(P. MADHAVI DEVI) (L.P. SAHU)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 04th October, 2021
*gmv
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WTA Nos. 2 & 3/Hyd/2018 AYs: 2009-10 and 2010-11 Sri Syed Hameeduddin Copy of Order forwarded to:
1. Sri Syed Hameeduddin, C/o Venugoapl & Chenoy, Chartered Accountants, 4-1-889/16/2, Tilak road, Hyderabad 500 001 Telangana
2. ACWT, Circle 9(1), Hyderabad
3. CWT(A)-7, Hyderabad
4. Pr.CWT-7, Hyderabad.
5. D.R. ITAT Hyderabad
6. Guard File 8