Surinder Nath vs CWT

Deepak Gupta, J.—By this common judgment, the aforesaid seven appeals under the Wealth Tax Act, are being disposed of since they all involve common questions of fact and law. These appeals relate to different assessment years but have been admitted on the same questions of law which read as follows:

Whether the Tribunal was correct in law in upholding the inclusion of an area measuring 3652.50 sq. yds. occupied by trees, serving as public paths, 25 per cent of the plinth area of the buildings, area between retaining walls, area between public roads and municipal roads and area where no construction is possible in the net wealth-tax of the appellant for the purpose of levy of wealth-tax under the provisions of the Wealth Tax Act ?

Whether the Tribunal was correct in law in holding that the area measuring 3652.50 occupied by trees, serving as public paths, 25 per cent of the plinth area of the buildings, area between retaining walls, area between public roads and municipal roads and area where no construction is possible, enjoyed a market value and that too equivalent to the other land ?

The brief facts necessary for decision of the appeals are that the assessee was owner in possession of 15023 sq. yds of land in Jakhu in the urban area of Shimla. For the purposes of Wealth Tax Act it is not disputed that this land is an asset within the meaning of the Act. The assessee however claimed that out of this land 5665.90 sq. yds of land should be valued at nil value on various grounds. The assessing officer did not accede to the prayer of the assessee. The assessee filed an appeal before the Commissioner of Wealth Tax (Appeals).The Commissioner of Wealth Tax (Appeals) came to the conclusion that the land which was actually covered by natural nullah measuring 671.4 sq. yds could not have commanded any market value and was therefore assessed at nil value. The CWT(A) also excluded 926.1 sq. yds of land on the ground that it had been sold and no longer formed part of the asset. The assessee filed an appeal before the learned Tribunal wherein he claimed that the following lands should be declared to be of nil value:

(i)

Natural nullah along with alleged useless land along with nullah

1417.7 sq. yds.

(ii)

Thickly wooded area i.e. area under trees

1769 sq. yds

(iii)

25% of covered plinth area

415 sq. yds.

(iv)

Area between public roads and municipal roads

434.2sq. yds

(v)

Area between retaining walls and roads

550 sq. yds.

(vi)

Road and public paths

906.7 sq. yds

(vii)

Area where no construction is possible

173.3 sq. yds.

Total

5665.9 sq. yds.

In this appeal the learned Tribunal held as follows:

....There appears to be some merit in the contentions of the assessee to the extent that part of area falling on both sides of nullah on the slopes of hills is unfit for construction and for that matter for any further commercial use. Similarly the area covered under pathways would not command any market value. Similarly, area falling between public roads and municipal roads would command lesser value. But we do not accept the contentions of the assessee that area covered by the trees in the estate would not command any value, it certainly adds to the value. It is also not correct hat land covered under the plinth area and retaining walls is of no use

Thereafter, the Tribunal went on to hold that there is an element of guesswork involved and allowed deduction of 10 per cent on the area of land after excluding the sold land and also the land which was appurtenant to the nullah and which was unfit for construction.

Aggrieved against the said order the assessee has filed the present appeals.

We have heard Sh. Vishal Mohan, learned Counsel for the assessee and Sh. Vinay Kuthiala, learned Counsel for the respondent.

The main contention raised on behalf of the assessee is that the Tribunal was not right in allowing deduction on the basis of percentage, once it came to the conclusion that the land under the nullah and the land under the pathways could not command any market value. It is further contended that the learned Tribunal has wrongly held that the area under the trees should not be excluded.

At the outset we may notice that the total land was 15023 sq. yds and 6 sq. ft. Out of this 920 sq. yds and 1 sq. ft. had already been sold by the assessee leaving a balance of 14097 sq. yds and 5 sq. ft. The learned Tribunal has allowed deduction in respect of the entire claim of the assessee with regard to the land measuring 1417 sq. yds and 7 sq. ft. falling under the nullah and also the land adjoining the nullah on which no construction could be raised. This leaves balance land of 12669 sq. yds and 7 sq. ft. The learned Tribunal has however made wrong calculations and while deducting the land under the nullah has only deducted 671 sq. yds which fall totally under the nullah and thereafter given deduction of 10 per cent and has come to the conclusion that the assessable area is 12083 sq. yds and 5 sq. ft. If we deduct the entire nullah land under the nullah and the land adjoining it which is worthless i.e. 1417 sq. yds and 7 sq.ft. the balance land works out to 12679 sq. yds and 7 sq. ft. only. Even according to the Tribunal the area under the roads and paths was of no- value. This area measures 906 sq. yds and 7 sq.ft. Therefore, the balance assessable area comes to 11873 sq. yards.

Sh. Vishal Mohan has strenuously urged that the area under the trees and 25 per cent of the covered plinth area should also be excluded. We cannot agree with this contention. Section 7 of the Wealth Tax Act lays down the manner in which the value of the asset has to be determined. Basically what this section provides is that the market value of the land shall be the value of the asset for the purposes of court fee and jurisdiction. Merely because an area is covered by trees does not mean that it has no market value. Even standing timber has its own market value. Similarly there is no ground for giving any deduction equivalent to 25 per cent of the covered area. The Tribunal has rightly granted deduction for the entire nullah area and the useless land along with the nullah as well as tends under the roads and paths. No further deductions can be allowed for the land equivalent to 25 per cent of the plinth area or falling under the retaining walls. The learned Tribunal has however held that the area between the public roads, municipal roads which is 434.02 sq. yds would be of lesser value than the rest of the land.

We have accepted all the findings given by the Tribunal as findings of fact but we are unable to agree with the relief granted by the Tribunal. Once the Tribunal came to the conclusion that certain lands had no value, the extent of this land should have been deducted from the total area while computing the value of the asset. Therefore, we hold that the total assessable land in the hand of the assessee was 11873 sq. yards. Out of this 434.2 sq. yds even according to the learned Tribunal was of lesser value.

In view of the above discussion, we are of the considered opinion that 11438 sq. yds and 7 sq. ft. of land has to be valued at the rates as fixed by the Tribunal for the various assessment years. However 434.2 sq. yds of land which the Tribunal has held is of lesser value should be valued at 75 per cent of the market value of the land assessed for each year.

The appeals are allowed in the aforesaid terms. No order as to costs.