IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `A', NEW DELHI
Before Sh. N. K. Saini, AM And Sh. Kuldip Singh, JM
WTA No. 8/Del/2012 : Asstt. Year : 2005-06
WTA No. 9/Del/2012 : Asstt. Year : 2006-07
Wealth Tax Officer, Vs Dr. Ashok Kataria,
Ward 37(2) 392, Mandakini Enclave, Alaknanda,
New Delhi New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AAACV3918K
Assessee by : Sh. G. K. Sukhla, Adv.
Revenue by: Sh. K. K. Jaiswal, DR
Date of Hearing : 07.10.2015 Date of Pronouncement : 12.10.2015
ORDER
PER N.K. SAINI, A.M.
These two appeals by the department are directed against the
separate orders each dated 16.04.2012 of the ld. CIT(A)-
XXVIII, New Delhi.
2. Common grounds have been raised in these appeals
which read as under:
" 1. Whether on the facts and in the circumstances of
the case, the CWT(A)has erred in allowing the
exemption u/s 5(1)(vi) for the plot under
construction as the same does not come under the
purview of house, or part of a house.
2 WTA No.8 & 9/Del/2012
Ashok Kataria
2. The grounds of appeal are without prejudice to
each other.
3. The appellant craves to add, amend or modify the
ground of appeal at any time. "
3. Facts of the case in brief are that the WTO while
assessing the Income Tax assessment for the assessment
year 2006-07, came to know that the assessee had taxable
wealth for the assessment year 2005-06 for which he was
supposed to file Wealth Tax Return. The WTO therefore,
after recording the reasons to believe that the wealth had
escaped assessment issued notice u/s 17(1) of the Wealth
Tax Act, 1957 on 25.09.2009 and duly served upon the
assessee but no return of wealth was filed in response to the
said notice. Again the WTO issued notice u/s 16(4) of the
Wealth Tax Act. In response the assessee filed his return of
wealth declaring net wealth of Rs. 3,98,804/-. The WTO
during the assessment proceedings observed that the
assessee had declared wealth consisting of a residential
property no. 392, Mandakini Enclave, one DDA Plot No. 6,
Mandakini Residential Scheme, New Delhi measuring
260.10 Sq. meters, a motor car, cash in hand and plant and
machinery, against which he had claimed debts amounting
to Rs. 56,21,464/- and Rs. 9,80,117/-. The WTO pointed out
3 WTA No.8 & 9/Del/2012
Ashok Kataria
that the property no. 392, Mandakini Enclave, New Delhi
valued at Rs. 3,22,000/- was used by the assessee for self
residence and the plot no. 6, Mandakini Residential Scheme
had been valued at Rs. 99,69,239/- and the cost of
construction on the said plot up to the date of valuation had
been declared at Rs. 29,09,654/-. The WTO was of the view
that the plot no. 6, Mandakini Residential Scheme valued at
Rs. 1,28,78,893/- was not exempt u/s 5(1)(vi) of the Wealth
Tax Act as the assessee had already claimed exemption u/s
2(ea)(i)(1) of the Wealth Tax Act in respect of one property.
The WTO also added a sum of Rs. 9,80,117/- on the
construction of house which was shown by the assessee as
secured loan from Corporation Bank. Accordingly, addition
of Rs. 1,38,59,010/- was made under the head " immovable
assets " .
4. Being aggrieved the assessee carried the matter to the
ld. CIT(A) and submitted that the assessee was entitled to
claim exemption for one house/property u/s 5(1)(vi) of the
Wealth Tax Act if he had more than one house property. It
was further stated that the AO wrongly applied the
provisions of Section 2(ea) of the Wealth Tax Act in
disallowing the exemption to the assessee. It was further
stated that as per the provisions of Section 5(vi) of the
4 WTA No.8 & 9/Del/2012
Ashok Kataria
Wealth Tax Act, the assessee was entitled to claim the
exemption of one house or a part of house or plot of land
and the option of claiming exemption on account of either
of two houses was at the option of the assessee. It was
contended that the assessee claimed exemption from Wealth
Tax on the plot no. 6, Mandakini Residential Scheme, New
Delhi measuring 260.10 Sq. meters (less than 500 Sq.
meters as provided in the section) which was under
construction and the AO had no option under the Act to pass
any order against the option claimed by the assessee. The
reliance was placed on the judgment of the Hon ' ble Punjab
& Haryana High Court in the case of CIT Vs Neena Jain
reported at 330 ITR 157.
5. The ld. CIT(A) after considering the submissions of the
assessee directed the WTO to allow the exemption as per
Section 5(1)(vi) of the Wealth Tax Act by observing as under:
" I have carefully considered the facts of the case.
Plot No. 6, Mandakini Residential Scheme,
Alaknanda, New Delhi was still under construction
during the relevant period. The appellant has
submitted copies of primary documents in support of
its claim i.e. the assessment order of the M.C.D
passed by Deputy Assessor & Collector CNZ dated
26.02.2011 for the said property, wherein it is
clearly stated that plot measuring 260.10 sqm. was
5 WTA No.8 & 9/Del/2012
Ashok Kataria
allotted by DDA to the taxpayer on 05.12.2002 over
which construction has been done during 2010 and
electric connection has been applied on 29.06.2010.
He states that entire property consisting of
basement to third floor is under self residential use.
Effective house property tax has been levied with
effect from 28.06.2010. A copy of demand notice for
new electric connection dated 28.06.2010 has also
been filed which clearly states that application is
made for a new connection for the said property.
Bill for BSES has been paid on 7.7.2010 for the first
time also the purchases for sanitary wares etc. are
made in July, 2010. These documents prove that
during the relevant period the said property was
still under construction.
The appellant has cited the judgment of
Commissioner of Income Tax Vs Neena Jain (2010)
330 ITR 157 (P&H) according to which the value of
the house under construction including investment
on construction is not liable to wealth tax. The ratio
of the above judgment squarely applies to the facts
of the present case. In the facts and circumstances
of the case, the Assessing Officer is not justified in
not allowing exemption u/s 5(1)(vi) of the Wealth
Tax Act. The Assessing Officer has also wrongly
applied section 2(ea)(i)(1). In the present case, the
facts are entirely different and section 2(ea)(i)(1)
cannot be invoked. The exemption as per section
5(1)(vi) not allowed by the Assessing Officer is
therefore, allowed. Appeal on these grounds is
allowed. "
6 WTA No.8 & 9/Del/2012
Ashok Kataria
8. Now the department is in appeal. The ld. DR strongly
supported the order of the WTO and reiterated the
observations made in the wealth tax assessment order dated
31.12.2010. It was further stated that the assessee was having
two houses, therefore, the WTO rightly made the addition of
one house. It was further stated that the ld. CIT(A) was not
justified in deleting the addition made by the AO.
9. In his rival submissions the ld. Counsel for the assessee
reiterated the submissions made before the authorities below
and strongly supported the impugned order.
10. We have considered the submissions of both the parties
and carefully gone through the material available on the
record. In the present case, the ld. CIT(A) categorically stated
that the assessee was having a plot no. 6 in Mandakini
Residential Scheme, Alaknanda, New Delhi, the said plot was
measuring 260.10 sqm and was under construction during the
year under consideration and that the construction had been
done during the year 2010, therefore, the said house which
was under construction was not liable to wealth tax. On a
similar issue the Hon ' ble Punjab & Haryana High Court in the
case of CIT Vs Smt. Neena Jain (supra) held as under:
7 WTA No.8 & 9/Del/2012
Ashok Kataria
"That the contention of the Revenue that "any building"
would fall within the definition of assets, was not only
devoid of merit but misplaced as well, because the word
"any building" could not possibly be read in isolation and it
had harmoniously to be construed with the remaining
portion of section 2(ea) of the Act, i.e. whether the building
was used for residential or commercial purposes or for the
purpose of maintaining a guest house, because an
incomplete building could not possibly either be used for
residential or commercial purposes or for purposes of
maintaining a guest house. Therefore, the word "building"
had to be interpreted to mean a completely built structure
having a roof, dwelling place, walls, doors, windows,
electric and sanitary fittings etc. If one or more such
components were lacking, then it could not possibly be said
that the building was a complete structure for the purpose of
section 2(ea) of the Act. The assessee was constructing the
building after obtaining sanction from the appropriate
authority. Therefore, the incomplete building of the assessee
neither fell within the definition of a building, as
contemplated under section 2(ea) of the Act, nor within the
purview of "urban land" as excluded by Explanation 1(b) of
the Act. The perusal of the scheme of the Act posits that it
was not always that any building or land appurtenant
thereto was straightaway liable to wealth tax. There was an
exclusion clause contained in Explanation 1(b) of the Act, in
regard to urban land as well. In that eventuality, the burden
of proof was on the Revenue and the adjudicating authority
was required to record a categorical finding that the
building of the assessee was actually exigible to wealth-tax
which was lacking in the case of the assessee. Thus the
Tribunal was justified and correctly negative the claim of
the Revenue and was thus right in holding that the value of
house under construction including investment on
construction was not liable to wealth-tax."
8 WTA No.8 & 9/Del/2012
Ashok Kataria
11. In the present case also the assessee was having a plot
measuring 260.10 sqm allotted by DDA on 05.12.2002 situated at
plot no. 6 Mandakini Residential Scheme, Alaknanda, New Delhi.
The said plot was under construction for the years under
consideration as construction had been done during the year 2010.
Therefore, the assessee was entitled for exemption u/s 5(1)(vi) of the
Wealth Tax Act as per the ratio laid down in the aforesaid referred to
case of CIT Vs Neena Jain (2011) 330 ITR 157 (supra). We,
therefore, do not see any valid ground to interfere with the findings
of the ld. CIT(A).
12. In the result appeals of the department are dismissed.
(Order Pronounced in the Court on 12/10/2015).
Sd/- Sd/-
(Kuldip Singh) (N. K. Saini)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 12/ 10/2015
*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5.DR: ITAT
ASSISTANT REGISTRAR
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