- (1.) Instant Wealth Tax Reference u/Sec. 27(1) of the Wealth Tax Act has been referred by the Income Tax Appellate Tribunal, Jaipur Bench at the instance of this Court to refer the following question of law. It is relevant for the assessment years 1976-77 and 1977-78:- "Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the provisions of Urban Land (Ceiling & Regulation) Act, 1976 are applicable for determining the market value of the plot for purposes of Wealth-tax on the relevant valuation date -
(2.) The brief facts for disposal of the reference is about the fair market value of the land owned by respondent assessee admeasuring 16000 sq.mt. in Ajmer District though the assessee owned 18000 sq. mt. of land and the dispute confines to 16000 sq. mt. of land 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 the subject land is situated and it was contended that ULCAR Act provides that the compensation would be fixed at Rs.5 per sq. mt. and therefore, the value of such excess land could not have been more than Rs.5/- per sq. mt. and on account of applicability of ULCAR Act, no person of ordinary prudence would have purchased such land on higher value/rates and it was mandatory on the part of a person holding excess land to have surrendered the same, thus the fair market value was the value which the assessee was entitled to receive from the Government. However, the CIT(A) was not inclined and accordingly rejected claim of the assessee and upheld the view of the AO.;