Income Tax Appellate Tribunal - Pune
Prabhkar Shripati Ladkat Huf), Pune vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
Pune Bench "A" , Pune
Before Shri I.C. Sudhir, Judicial Member
and Shri G.S. Pannu, Accountant Member
Sr.No WTA No. Asstt.Year Appellant Vs. Respondent
1. 01/PN/2009 2000-01 Wealth Tax Officer, Vs. Prabhakar Shripati
to 2004- Central-I, Pune, PMT Ladkat (HUF), 267,
05 Bldg., 4th Floor, C- Bhavani Peth, Pune -
Wing, Pune 42,
PAN: AABHL 1595A
2. 15/PN/2011 2000-01 -do- Vs. -do-
3. 16/PN/2011 2001-02 -do- Vs. -do-
4. 17/PN/2011 2002-03 -do- Vs. -do-
5. 18/PN/2011 2003-04 -do- Vs. -do-
6. 19/PN/2011 2004-05 -do- Vs. -do-
Assessee by : Shri. V.L. Jain
Department by : Shri S.K. Ambastha
Date of hearing : 18.10.11
Date of Pronouncement: .11.11
ORDER
Per I.C. Sudhir, JM
In all these appeals, the revenue has questioned first appellate order on the following common grounds :
1. The Ld CIT(A) has erred in directing that the land at Wanawari should be valued at the rates applicable for acquisition under ULC when development rights over a part of the land was sold by the assessee for a much higher consideration even when the land was still covered under ULC.
2. The Ld. CIT(A) has erred in directing that the land at Bhawani Peth should be valued under Rule 3 of Schedule III of the W.T. Act, 1957 when the said rule is applicable only for valuation of building and land appurtenant thereto and not for valuation of land.
2 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011 Prabhakar Shripati Ladkat (HUF) A.Y.s.2000-01 to 2004-05etc.
Page of 15
3. The Ld. CIT(A) has erred in relying on the decision cited by the assessee as the facts in the present case are different from those in the cited cases.
4. The Ld. CIT(A) has erred in relying on the observations of the Hon'ble Supreme Court in the case of General Manager, Oil and Natural Gas Corporation Ltd. Vs. Rameshbhai Jeevanbhai Patel and others reported at 2008 AIR CW 5947 as the Hon'ble Supreme Court in that case was dealing with the question of valuation of acquired land."
We note that so far as WTA No. 1/PN/2009 is concerned, it is not maintainable and it has become infructuous in view of order dated 17.6.2011 of the Tribunal whereby Department was directed to file separate appeals for each of the A.Ys. involved instead of filing a common appeal for all the A.Ys. i.e. WTA No. 1/PN/2009. This appeal is accordingly dismissed as having become infructuous in view of filing of separate appeals for each of the A.Ys. now registered as market as WTAs 15 to 19/PN/2011.
2. We have heard and considered the arguments advanced by the parties and have gone through the orders of the lower authorities, material available on the record and the decisions relied upon.
3. The facts in brief are that as on 31st March 2000, the assessee owned following immovable properties :
a) Building situation at Bhawani Peth, Pune which was let out against which rent at the rate of Rs. 28,000/- per annum was received; and
(b) urban land situated at Survey No. 5/1, Wanawadi village, Pune & SVT No. 44, Hissa No. 1A/1 situated at Wanawari, Pune.
The assessee filed return of wealth for the A.Ys. 2000-01 to 2003-04 on 22nd February 2007 disclosing total value of wealth as under :
3 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011 Prabhakar Shripati Ladkat (HUF) A.Y.s.2000-01 to 2004-05etc.
Page of 15 Asstt. Year Wealth disclosed Rs.
2000-01 5,62,500/- 2001-02 5,57,100/- 2002-03 5,80,400/- 2003-04 5,89,100/- 2004-05 6,10,700/-
It was submitted that the land owned by the assessee at Wanawari admeasuring 17,500 Sq. mtr was declared as surplus by Urban Land (Ceiling and Regulation) (in short ULC) authority vide its order dated 26.2.1982. In the said order, the ULC authority held that the assessee was entitled to retain 1000 Sq. mtr. of land out of properties located at Wanawari in Pune city. It was stated that the property of the assessee at Bhawani Peth itself was more than 1000 Sq.mtrs. which was retained by the assessee and thus the entire land at Wanawari became surplus under ULC Act and accordingly the said surplus land was valued at Rs. 5/- per Sq. mtr which worked out at Rs. 87,500/-. It was submitted that this valuation was based on the decision of the Pune Bench of the Tribunal in the case of Late Shri T.H. Poonawala and Ors in WTA No. 10/PN/98 for A.Y. 1991-92 wherein the valuation done at the rate of Rs. 5/- per Sq Mtr awareded for compensation under ULC Act, was adopted.
4. In response to the show cause notice issued by the A.O as to why the land situated at S. No. 5/1 and S. 44 at Wanawari should not be valued at Rs. 2,92,29,255/- and Rs. 2,44,21,500/- for the purpose of valuation for A.Y. 2000-01, the assessee submitted that the entire land at Wanawari became surplus under ULC as the assessee had retained its property at Bhawani Peth which was more than 1000 Sq mtrs.
4 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011 Prabhakar Shripati Ladkat (HUF) A.Y.s.2000-01 to 2004-05etc.
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5. Regarding property at Bhawani Peth, assessee submitted that the said property was rented out as per following details :
Name of the party Total Area Constructed Area Vacant Area
a)HPCL 1330 sq.mtr. 278.81 1051.19
b)Prakash Nimjiya 270 sq.mtr. 270.00 -
c)Jaswant timber 500 sq.mtr. 500.00 - d) Malbaar 450 sq.mtr. 9.29 440.71 e)Maharashtra 850 sq.mtr. 278.81 571.19 Timber Tdg. Co. f)Reliable Services 600 sq.mtr. 9.29 590.71
6. It was submitted that the above property was covered under Schedule III of the Wealth Tax Act and it was applicable for determining the valuation of this property. It was submitted that on that land, construction of building was there which was being used by the different tenants for their business purposes. Since construction was in existence on that land, it was submitted that the valuation had to be as per rule 3 of Part B of Schedule III. It was further stated that the entire property was rented and not a single sq. mtr was in the possession of the assessee, therefore, the valuation adopted by the A.O considering the stamp duty valuation has a fair market value was factually incorrect since the valuation by the stamp authority is based on the circle rates. It was submitted that this circle rate adopts uniform rate of land for an entire locality which inherently disregard the peculiar feature of the particular property. It was submitted that even in a particular area on account of location factor and possibility of commercial use, there can be wide variation in the prices of land.
7. Before the Ld CIT(A), the assessee while reiterating the above submissions, also placed reliance on several decisions including decision of Hon'ble Supreme Court in the case of General Manager, Oil & Natural Gas Corporation Ltd. Vs. Rameshbhai Jeevanbhai Patel, 2008 AIR SCW 5947 wherein while deciding the issue as how to 5 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011 Prabhakar Shripati Ladkat (HUF) A.Y.s.2000-01 to 2004-05etc.
Page of 15 value a property, it has been observed that the Court should avoid determination of market value with reference to subsequent/future transaction.
8. The Ld. CIT(A) has held that the property at Wanawari should be valued as per rate applicable to ULC since this property was under ULC as on the valuation date. Regarding the property at Bhawani Peth, he has held that since the property was given on rent and no portion of it is under the control of the assessee, it is required to be assessed as per Rule 3 of Schedule III of the Wealth Tax Act, 1957.
9. Parties have argued their respective cases at length, which we will discuss in the succeeding paragraphs.
10. Having gone through the orders of the authorities below, we find that the only issue remained to be adjudicated upon is in respect of valuation of land declared surplus under the Urban Land (Ceiling and Regulation) Act 1976 (in short ULC Act). The contention of the assessee is that the land being declared surplus under the ULC Act, it cannot be valued by any other method except as provided in Section 11 of the said Act i.e. @ Rs. 10/- per Sq. mtr. In respect of land being declared surplus under the ULC Act, the AO has noted that the assessee had sold the development right therein at huge price as mentioned above (i.e. for Rs. 2,92,29,255/- for the land at S.No. 5/1 and for Rs. 2,44,21,500/- for the land at S.No. 44 both at Wanawari). The A.O was of the view that the value of the property is to be determined as per Rule 20 (residuary part - H of Schedule III), W.T. Rules, which reads as under :
"The value of any asset, other than cash, being an asset which is not covered by Rules 3 to 19, for the purposes of the said, shall be estimated to be the price, which in the opinion of the A.O, it would fetch if sold in the open market on the valuation date."
The A.O was of the view that the property under consideration was an open land and the valuation thereof is not governed by Rules 3 to 19 of the Wealth Tax Rules. Accordingly, the valuation has to be done as per Rule 20 (residuary part -H of 6 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011 Prabhakar Shripati Ladkat (HUF) A.Y.s.2000-01 to 2004-05etc.
Page of 15 Schedule- III). The land was sold at Rs. 5,50,00,000/- in F.Y. 2005-06 and at Rs.3,35,00,000/- in F.Y. 2003-04. The A.O held that what is important is the fair market value on the date of valuation which will depend on certain facts including the fact that whether the land is declared surplus under the ULC Act 1976. Noting this fact that the property was sold at such a huge market rate in spite of the fact that the said land was declared surplus under ULC Act, it was having market value higher than what is to be worked out as per Section 11 of ULC Act, . the A.O. y adopted the market value of the property at S. No. 5/1, Wanawari , Pune at Rs. 2,92,29,255/- and S. No. 44, Wanawari, Pune at Rs. 2,44,21,500/-. Accordingly, he made total addition of Rs. 5,35,63,255/- to the net declared by the assessee on account of net valuation of the said properties as per the working reproduced below:
"
Sr.No. Particulars of Value declared Value adopted Difference in property valuation
1. Land at 87,500 2,92,29,255 S.No.5/1, Wanawari,Pune
2. Land at 87,500 2,44,21,500 S.No.44 Wanawari,Pune 87,500 5,36,50,755 5,35,63,255 "
11. Regarding the property at Bhawani Peth, the A.O held that the assessee had given the land on rent. The construction thereon was made by the tenants for their own purpose. Thus, he noted that neither the assessee is owner of the building constructed on the said land nor had he let out any such constructed property. The A.O held that provisions of Rule 3 of part B, Schedule III of W.T. Rules are applicable only to the constructed property owned by the assessee. The A.O, accordingly held that the property under consideration cannot be valued as per Rule 3 and the same has to be valued as per Rule 20 of Schedule-III. The A.O also observed that the most reasonable method for determining the fair market value of the property for the 7 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011 Prabhakar Shripati Ladkat (HUF) A.Y.s.2000-01 to 2004-05etc.
Page of 15 year under consideration is to adopt the value determined by the State Government for stamp duty purpose. The A.O. accordingly adopted value of the property worked out for stamp duty purpose on the date of valuation as under :
Period Rate Valuation 0.1.01.1997 to 31.12.1997 3565 1,42,60,000/- 01.01.2001 to 31.12.2001 4095 1,63,80,000/-
The A.O. noted that the value of the property comes to Rs. 1,59,56,000/- as on 31st March 2000 by adopting average increase in value of the property over the years from the year 1997 to 2001, worked out as under :
"Total difference in value over 5 years : Rs. 21,20,000/-
(Rs. 163.80 Lacs (-) Rs. 142.60 Lacs)
Average increase per year : Rs. 4,24,000/-
Value as on 31.03.2000
(163.80 Lacs (-) Rs. 4.24 Lacs) : Rs.1,59,56,000/-"
The A.O. thus adopted the fair market value of the property at Rs. 1,59,56,000/- as against Rs. 3,50,000/- claimed by the assessee.
12. The Ld CIT(A) has decided the issue in para No.3.3 and 3.3.1 of the first appellate order, reproduced as under :
"3.3 I have carefully considered the submission of the appellant and perused material on record. It is an undisputed fact that the Wanowari property was under U.L.C. and it was released from U.L.C. vide order dated 31-03-2006 w.e.f. 17-02-2007. In view of this factual position, submission of the appellant, judicial authorities cited by the appellant hereinbefore in the written submission and taking into account 'obiter dicta' of Hon'ble Supreme Court in the case of General Manager, Oil and Natural Gas Corporation Vs. 8 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011 Prabhakar Shripati Ladkat (HUF) A.Y.s.2000-01 to 2004-05etc.
Page of 15 Rameshbhai Jeevanbhai Patel and Others reported in 2008 AIR SCW 5947, it is held that the property at Wanawari should be valued as per rate applicable to U.L.C. since this property was under ULC as on the valuation date. Appellant gets consequential relief.
3.3.1 As regards the property located at Bhavani Peth, it is an undisputed fact this property has been given on rent. In view of the judicial decisions cited by the appellant, position of law in this regard and taking into account the submission of the appellant adduced hereinbefore, I am of the considered view that the property at Bhavani Peth requires to be assessed as per Rule 3 of Schedule III of the Wealth Tax Act, 1957 since this property has been given on rent and no portion of the property is under the control of the appellant. Assessing Officer is directed accordingly. Appellant gets consequential relief."
13. In support of the ground, the Ld. D.R. has basically placed reliance on the assessment order. He submitted that there was search action u/s. 132 on 6.7.2006 in the Ladkat group. The returns have been filed by the group after the search. The assessee had 3 plots of land vis. (i) S. No. 5/1, Wanawari, Pune ; (ii) S. No. 44, Hissa No. 1A/1, Wanawari, Pune; and (iii) land at Bhawani Peth, Pune. The total area is 21,500 sq. mtr (4000 sq mtr of the Bhawani peth and 17500 sq mtr at Wanawari. He pointed out that land at Survey No. 5/1, Wanawari was sold to M/s. Umesh Real Estate at Rs. 5,50,00,000/- vide agreement dt. 14.6.2006 i.e. relevant to A.Y. 2007-
08. Thus, this property is assessable for all the 5 A.Ys.
14. The Ld. D.R. submitted further that land at S. No. 44 at Wanawari was sold to Goyal Properties for Rs. 3,35,00,000/- vide agreement dt. 15.10.2003, hence this property is assessable only till 2003-04. He submitted further that land at Bhawani Peth was not sold in the relevant 5 years and is assessable for all the relevant A.Ys.
15. The Ld. D.R. submitted that Schedule III of W.T. Act laid down how the assets are to be valued. The valuation of land is not governed by Rules 3 to 19 of Schedule III, hence Rule 20 of Section III of the W.T. Act is applicable. In respect of 9 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011 Prabhakar Shripati Ladkat (HUF) A.Y.s.2000-01 to 2004-05etc.
Page of 15 land at Bhawani Peth, the assessee has contended that it should be valued as per Rule 3 Schedule III since there are construction. Rule 3 is not applicable since (i) assessee does not own the construction, it only owns land which was leased to some parties. Without prejudice to this submission, the Ld. D.R. submitted that the construction area is only 1336 Sq. mtr out of the total land area of 4000 sq. mtrs. The vacant area is 66% of the total area and thus will not fall under the category of building and land appurtenant to it. He submitted that the rules do not cover the cases where vacant land is 66% of the total area. In this regard, he referred Rule 8(b) of the Schedule III. The Ld. D.R. accordingly tried to justify the application of Rule 20 by the A.O to value the land. The Ld. D.R. submitted further that the only documents made available before the A.O and the ld. CWT(A) are the orders u/s. 8(4) of ULC Act dated. 26.2.1982 (Paper Book page No. 70) and revised order u/s. 8(4) of ULC Act dt. 3.9.2004 (paper book page No. 74 of the paper book). Any fresh documents cannot be entertained at this stage as they were not before the lower authorities. He submitted further that order dt. 3.9.2004 clearly states that the order dt. 26.2.1982 was set aside on 26.8.1991. Further, even in this order, it held only 10,613 sq mtr as Surplus land out of 21,500 sq. mtr.. He pointed out that the order dt. 3.9.2004 is outside the period covered in the 5 appeals i.e. 31st March 2004 . Thus there was no order under ULC Act for period covered by the assessee before the Tribunal. Without prejudice, he submitted that orders u/s. 8(4) of ULC Act are merely show cause notice and there are no orders u/s. 10 of ULC Act for the relevant period before the Tribunal in the present departmental appeal. The Ld. D.R. submitted further that the ULC Act 1976 was repealed from time to time vide the Urban land (Ceiling Regulation )Repeal Act 1999. Pursuant to this, Maharashtra State was in the process of repealing its own significant Act. This is the reason for the high value at which the assessee sold his land. The Ld. D.R. also tried to distinguish the decision cited by the assessee.
10 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011 Prabhakar Shripati Ladkat (HUF) A.Y.s.2000-01 to 2004-05etc.
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16. The Ld. Ld. A.R., on the other hand, tried to justify the first appellate order. He also referred the copies of the documents made available at page Nos. 1 to 124 of the paper book (volume 1) i.e. copies of Wealth Tax Returns for the A.Ys. 2000- 01 to 2004-05 (page no. 1 to 16), Development Agreement in respect of property sold, Survey Nos. 5/1 and 44/1 at Wanawari (page Nos. 17 to 56), written submission made before DCIT Central Circle 1 (2), (Page Nos. 57 to 99), order of the Tribunal in the case of G.V. Mudaliyar (HUF), (page no. 100 to 101), extract of Urban Land Ceiling Act (page nos. 103 to 104), order of the Tribunal in the case of T.H. Poonawala (page No. 67 to 699), Orders passed u/s. 8(4) of Urban Land (C&R) Act 1976, page 70 to 78), and written submissions made before the land CWT(A) (Page nos. 105 to 124). He also referred to the documents filed in paper book volume 2 i.e. copies of Maharashtra Government letter dt. 31st March 2006, ULC Authority's order dt. 17.2.2007 with its English translation (page Nos. 3 to 16). He placed reliance on the following decisions :
1. G.V. Mudaliyar (HUF) Vs. ACIT, 235 CTR (Bom) 1119
2. ONGC Vs. Rameshbhai Jeevanbhai Patel, 2008 AIR SCW 5947
3. ...WTA No. 100 to 111/PN/91, A.Ys. 1980-81 to 1986-87, order dt. 2nd March 2001
4. T.H. Poonawala Vs. ACIT & Anr., WTA No. 10/PN/98 & Others, 1984-85 to 1993-94, order dt. 16.9.2005.
17. Considering the above submissions, we find that so far as properties situated at S. No. 5/1 & S. No. 44, 1A/1 at Wanawari are concerned, it appears that these properties were under ULC Act proceedings during the period relevant for the A.Ys.
under consideration. We find from the orders of the authorities below that the land owned by the assessee at Wanawari admeasuring 17500 Sq Mtrs was declared as surplus by the ULC authority vide its order dated 26.2.1982. Entire day to day proceedings before the ULC authority relating to these properties of the assessee have not been made available before us, but copies of a letters dated 31.3.2006 and 17.2.2007 issued by the Collector and competent authority relating to ULC case, 11 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011 Prabhakar Shripati Ladkat (HUF) A.Y.s.2000-01 to 2004-05etc.
Page of 15 have been filed before us under the certificate that the same were made available before the A.O and the first appellate authority. On perusal of these letters, we find that the assessee had sought rectification in view of the appellate order dated 26.8.1991 u/s. 33 of the ULC Act. After giving effect to the said order dated 26.8.1991 of the appellate authority, the Collector and competent authority vide letter dated 31st March 2006 (w.e.f. 17.2.2007) has held that in the property bearing S. No. 44/1A Wanawari, the land under construction of 5839.25 Sq. mtrs out of the excess land of 6184.5 sq. mtrs is eligible for exclusion as per Rule 2 (Q)(1) of the Regulation. After exclusion of the said area from the excess land, the land of 344.75 sq. mtrs. has been worked out as open land.
18. Similarly, in respect of property bearing S. No. 5/1 Wanawari, it has been mentioned that the assessee has been allowed 1 ceiling limit of 1000 sq.mtrs. as per the order u/s. 8(4) of the ULC Act. But, the assessee has only 344.75 sq.mtrs. of the balance land, therefore, the assessee has no excess land. This rectification order has been issued on 17.2.2007 by the District Collector and competent authority, Pune Division. Thus, we do not find reason to deviate from the finding of the ld CWT(A) that during the years under consideration, the Wanawari properties were under ULC and these were released from ULC vide order dt. 31st March 2006 w.e.f. 17.2.2007. The first appellate authority has accepted the contention of the assessee in view of the decision of the Hon'ble Supreme Court in the case of General Manager, ONGC Vs. Rameshbhai Jeevanbhai Patel and Others (Supra) that the Court should avoid determination of market value with reference to subsequent/future transaction. In view of the decision of the Hon'ble Supreme Court in the case of General Manager, Oil and Natural Gas Corporation Vs. Rameshbhai Jeevanbhai Patel and Others (Supra), we do not find reason to disturb the finding of the Ld CWT(A) so far as issue related to the A.Ys. 2000-01 to 2003-04 regarding the property bearing S.No. 44 Wanawari is concerned as during the A.Y. 2004-05, the property bearing S. No. 44 Wanawari has been sold for Rs.
12 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011 Prabhakar Shripati Ladkat (HUF) A.Y.s.2000-01 to 2004-05etc.
Page of 15 3,35,00,000/- on 15.10.2003 under Development agreement with M/s. Goyal Properties. A copy of this Registered Deed has been made available at page No. 36 to 56 of the Paper Book No. 1).
19. So far as property bearing No. S.No. 5/1 Wanawari is concerned, admittedly this property has not been sold during the A.Ys. under consideration and it also appears that it was not cleared from the ongoing proceedings under Urban Land (Ceiling & Regulation) Act till passing of the rectification order dated 31st March 2006 w.e.f. 17.2.2007. The view of the Ld CIT(A) that property at Wanawari should be valued as per rate applicable to ULC since the property was under ULC proceedings as on the valuation date is fully supported and covered by the decision of the Hon'ble Supreme Court in the case of General Manager, Oil and Natural Gas Corporation Vs. Rameshbhai Jeevanbhai Patel and Others (Supra). In that case, before the Hon'ble Supreme Court, the Hon'ble Supreme Court while deciding the issue about how to value the property under ULC, categorically held that the Court should not determine the market value with reference to subsequent/future transaction.
20. In relation to the property at Wanawari, the Ld. D.R. has also contended that the Urban Land (Ceiling & Regulation) Act 1976 has been repealed by the Parliament on 22nd March 1999 vide the Urban Land (Ceiling & Regulation ) Act repealed in 1999 (No. 15 of 1999). He has also filed an extract thereof. Having gone through the same, it appears to us that the same has been passed in relation to State of Haryana & Punjab and to all the Union Territories and apply to such other States which adopt this Act by resolution passed in that behalf under clause (2) of Article 252 of the Constitution. In the present case, it appears from the document placed on the record that the competent authority has passed its last order in the case of assessee relating to Wanawari property on 17.2.2007. The other argument advanced by the Ld. D.R remained that order u/s. 8(4) of UL (C & R) Act are in the nature of show cause notice and after dealing with the objection, 13 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011 Prabhakar Shripati Ladkat (HUF) A.Y.s.2000-01 to 2004-05etc.
Page of 15 final statement is prepared u/s. 9 of the Act and U/s. 10(3) the final notification is issued that such excess land is deemed to be acquired by the State. For the purpose of valuation of such property, we do not find much substance in this contention as even during the pendency of the proceedings under the UL(C & R) Act, the value of the property is depressed as it has been held by decisions relied upon by Ld. A.R. As discussed above, the documents furnished by the assessee clearly suggest that proceedings under the provisions of UL (C & R) Act were going on against the Wanawari property during the A.Ys. under consideration. The matter was eclipsed under the ongoing proceedings of UL (C & R ) Act during the period of A.Ys. under consideration under one or the other provisions thereof. The grounds raising the issue in relation to the value of Wanawari are thus rejected.
21. So far as property at Bhawani Peth is concerned, the Ld CIT(A) has held that the same is required to be assessed as per Rule 3 of Schedule III of the Wealth Tax Act since the property was given on rent and no portion of the property was under
the control of the assessee. He has accordingly directed the A.O to assess the property. The grievance of the Department is that the construction on the said property was in the area of 1336 Sq. mtrs only out of the total area of 4000 Sq. mtrs and thus vacant area was 66% of the total area, hence it will not fall under the category of building and land appurtenant to it. In this regard, reference of Rule 8(b) of the Schedule III of Wealth Tax Act has been given and it has been submitted by the ld. D.R. that the A.O was correct in applying Rule 20 of Schedule III to value the land. We find that the Ld CWT(A) has held that Rule 3 of Schedule III of the Wealth Tax Act was applicable in the present case since the property was given on rent and no portion of the property was under the control of the assessee. For a ready reference, Rule 8(b) of Schedule III of W.T. Act 1957 is being reproduced hereunder :
"8.Nothing contained in rule 3 shall apply, -
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Page of 15
(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."
Undisputedly, in the present case before us the difference between the unbuilt area and the specified area exceeds twenty percent of the aggregate area, hence in our opinion Rule 20 of the Schedule III is applicable to determine the value of the property at Bhawani Peth. The A.O has however applied Rule 20 of the Schedule III on the basis that the assessee is not the owner of the construction as the same has been constructed by the tenants. We do not find substance therein as after eviction of the tenants the tenants would not take away the construction if any made by or owned by them and while letting out the property the construction if any agreed to be raised by the tenants must have been remained part of the consideration of the rent. Under these circumstances we find justification behind application of Rule 20 of the Schedule III by the A.O to value the property at Bhawani Peth but of course subject to verification by the A.O that during the years in question vacant land as per Rule 8(b) of the Schedule III was more than 20% of the total area. The matter is thus set aside to the file of the A.O.
22. In result, appeals are partly allowed.
The order is pronounced in the open Court on 30th November 2011.
Sd/- Sd/-
(G.S. PANNU) (I.C. SUDHIR )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Pune, dated the 30th November, 2011
15 WTA Nos 01 /PN/2009 & 15 to 19/PN/2011
Prabhakar Shripati Ladkat (HUF)
A.Y.s.2000-01 to 2004-05etc.
Page of 15
US
Copy of the order is forwarded to :
1. The Appellant
2. The Respondent
3. The CWT - I, Pune
4. The CIT(A)-I, Pune
5. The D.R. "A" Bench, Pune
6. Guard File
By order
Senior Private Secretary
Income Tax Appellate Tribunal
Pune