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Wealth Tax - Whether if building under construction is not to be treated as asset chargeable to tax, then land on which construction was commenced will have to be included in assets under clause (v) - YES: HC

By TIOL News Service

AHMEDABAD, JUNE 29, 2016: WHETHER if the building under construction is not to be regarded as an asset chargeable to tax, then the land on which the construction was commenced will have to be included in the assets under clause (v). YES is the verdict.

Facts of the case

The assessee is a company. AO had assessed the total income of the assessee at Rs. 1,50,66,500/- vide his order dated 13.03.2006 as against the returned income of Rs. 1,10,696/- in case of AY 2001-02 and Rs. 1,58,59,922/- as against the returned income of Rs. 82,036/- vide order dated 13.03.2006 so far as AY 2002-03 was concerned. The assessee challenged the said order by filing appeals before CIT(A) Baroda who vide order dated 24.01.2007 allowed the appeals. On further appeal, Tribunal allowed the appeals filed by the department and set aside the order passed by CIT(A) thereby upholding the order of AO.

Held that,

++ the Tribunal was justified in reversing the order passed by CIT(A). Identical issue had come up before HC by way of Wealth Tax Reference No. 267 of 1996. In view of the above, we are of the opinion that the Tribunal was justified in holding that the CIT(A) was not justified in excluding the land on which building was under construction from the purview of charge to wealth-tax. This Court vide the aforesaid decision has held that if the building under construction is not to be regarded as building then the land on which the construction is started will have to be included in the assets under clause (v) because land mentioned therein does not carry any qualification or the adjective vacant and that even otherwise the land does not lose its value as an asset simply because construction is started thereon. We are in complete agreement with the reasonings adopted by the Tribunal. In the premises aforesaid, question raised in the present appeals is answered in favour of revenue and against the assessee. The impugned order passed by the Tribunal is confirmed. Appeals stand dismissed accordingly.

(See 2016-TIOL-1237-HC-AHM-WT)


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