ASSISTANT COMMISSIONER OF WEALTH TAX Vs. ANJARIA ESTATE P LTD
INCOME TAX APPELLATE TRIBUNAL
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Per Shri B. L. Chhibber, (Accountant Member) - The following identical grounds have been raised in these two appeals by the revenue : -
(1.) (1) The learned CIT (A) has erred in law and on facts in holding that the incomplete structure is not a building and, therefore, not chargeable to wealth-tax in the hands of the assessee who is closely-held company. (2) The learned CIT (A) has erred in law and on facts in holding that the market value of incomplete structure on the valuation date was the value as per audited balance sheet of the assessee. (3) The learned CIT (Appeals) has erred in law and on facts in holding that the land under incomplete structure is no longer a plot of land and it cannot be subjected to assessment in the hands of closely-held company. (4) The learned CIT (Appeals) has erred in law and on facts in holding that the basis of adopting value of incomplete structure is wrong. (5) The learned CIT (Appeals) has erred in law and on facts in holding that several Factors will directly affect the market value of incomplete structure as on valuation date, which alone can be considered for the purpose of assessment. (6) On the facts of the case, the CIT (Appeals) ought to have upheld the order of the AC (IT). (7) It is, therefore, prayed that the order of the CIT (Appeals) may be set aside and that of the AC be restored to the above extent.
(2.) The assessee is a private limited company engaged in the business of development of real estate/immovable properties. The assessee had undertaken development of a multi-storeyed commercial complex in the year 1982. The building project in question was a six-storey building comprising of shops and offices. The relevant valuation dates for the years under appeal are 30-6-1984 and 30-6-1985. During the years under appeal, the commercial complex was under construction. This fact is not in dispute as it is born from the report of the Valuation Officer (page 2 of the report). On the relevant valuation dates the work completed and not sold was shown under the head "Commercial Flats" and the construction work-in-progress was shown as "Work-in-progress" in the balance sheets. In the statement of wealth the assessee-company placed a note to the effect that work-in-progress in this case was not a specified asset, i.e., it was neither a building nor a land and was therefore not chargeable to tax. The Asstt. CWT did not agree to the version given by the assessee observing, inter alia, as under :- "The contention of the assessee is not accepted. Work-in-progress has some market value. The assessee-company is engaged in the business of construction. It has made some expenses in the construction though it is not completed. It has some market value and, therefore, the value of work-in-progress is to be taken in the total wealth. It is an asset as per definition of section 2(e) of WT Act, and the section does not exclude it either assessees contention that it is not a usable commodity and before its completion it cannot be called a building, cannot be accepted. A building primarily remains a building though it may be unfinished, it may be diplated or it may be abandoned. Basic character of a building remains, though its face may change many a times. As for its use, term use cannot be restricted to present. If it cannot be used presently it could not be said that it could not be usable in future. A building may remain unoccupied for years but it still remains building. Capability of occupation should be judged in a whole prospective. It should not be restricted to present only, what about future. If today a building cannot be said that it has no capability of occupation. It can, very well be occupied in future, it means it has a capability of occupation. Capability is a relative term vis-a-vis time and future. If occupation is certain then that building has a defined capacity of occupation. Capability has something like uncertainty which may yet defined in a future to some certainty. Therefore, I consider occupation capability question is not relevant to definition of term building. As per my above discussion and considering the fact of case I am not inclined to accept assessees contention. The work-in-progress is an asset in the form of building in the hands of assessee and it is covered in the definition of as an asset as per section 2(e) and nor section 5 nor section 2(e) exempts it and it has a consideration in the market and it is charged to wealth-tax. Further it has a market value."
The Asstt. CWT referred the matter to the Valuation Cell and the District Valuation Officer worked out years-wise break-up of expenditure on construction as under :
The assessee had shown the valuation of land at Rs. 3,48,001. After making enquiries from the sub-registrars office, the learned Asstt. CWT estimated the value of land at Rs. 4,48,398. He accordingly assessed to wealth-tax the work-in-progress and the value of the land.
(3.) ON appeal, the CWT (A) held that incomplete structure was not a building and, therefore, not chargeable to wealth-tax in the hands of the assessee which is a closely-held company. He further held that the land under incomplete construction was no longer a plot of land and it could not be subjected to assessment in the hands of the assessee.;
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