Seminar on WEALTH TAX Act, 1957 - gunturicai.org TAX OVERVIEW-30-07-13.pdf · Seminar on WEALTH TAX Act, 1957 BY C.A. ... assets is also known as clubbing ... the transferor has the

Seminar on

WEALTH TAX Act, 1957 BY

C.A. A.V.HARANATH BABU M.Com.,F.C.A.,B.L.

E-Mail: [email protected] Ph: 9885678619

mailto:[email protected]

PRESENTATION SCHEMA

Introduction Scope and purpose

Definitions Valuation of Assets Case studies Assessment Procedures Miscellaneous

Parallel Provisions under Income Tax Act Proposed changes under DTC

1/24/2014 C.A. A.V.HARANATH BABU

2

SCOPE & PURPOSE OF TAXATION

Wealth Tax - levy on UNPRODUCTIVE “assets” Object - levy tax on persons having huge wealth to

contribute a certain sum to the ex-chequer Chapters - VII Sections – 47 Schedules – 3 Rules -21


3

Revenue to the Govt from Wealth Tax in F/y 2012-13

Rs. 685 Crores as against 666 budget (2.85 % growth)

Note: For every Rs.1 /- of cost of tax collection _ Govt gets only Rs. 1.90 tax. (However, Income tax it gets Rs. 60/-)


4

GLOBAL WEALTH TAX PARALLELS

Nomenclature

Country

Solidarity tax on wealth France

Wealth tax Greece, Norway, Switzerland, Netherlands & India

Property tax US


5

•In Austria, Denmark, Germany, Finland, Iceland, Spain and Luxembourg wealth tax was abolished during the last decade The concept of wealth tax does not exist in Belgium and Great Britain

WEALTH TAX ACT, 1957 Levy - on the basis of Nationality, Residential Status, and

Location of asset on Valuation date ie., 31st March of the P/Y–sec 3.

Tax on – Net Wealth @ 1% if exceeds Rs.30 lacs as on 31st March of previous year. (upto A/Y 2009-10 it was Rs. 15 lakhs) ISSUE: Change on Ownership on Valuation date.(Banarsi Dass Vs

CWT) No surcharge and Education cess is levied.

Method of Accounting –not relevant Rounding of Net Wealth-Sec 44C – Nearest Rs.100/- Rounding of Tax-Sec 44D – Nearest Rs.1/- Law in force on the 1st day of A/y is applicable (not law as on

valuation date)


6

SEC 3(2) - APPLICABILITY


7

Applicable Sec 3(2)

Not applicable Sec 45

• Individual (includes legal heirs) • HUF • Company • AOP chargeable u/s 21AA.ie.,when the shares of members are not determinable

•Partnership Firms •Sec 25 companies • Any co-operative society • Any social club •Any political party •Any mutual fund u/s 10(23D) of IT Act . RBI

SCOPE OF WEALTH TAX-SEC-6


8

Individual who Is citizen of

India

HUF

Company

ROR

Resident Company

Global Wealth Taxable

Asset located in India & outside

India

Debts in relation to assets in India

& outside India -deductable

SCOPE OF WEALTH TAX


9

Other Indian Citizens & Foreign Citizens

HUF

Company

For IC- RBNOR and NR

For FC -ALL

Non - Resident Company

Indian Wealth Taxable

Asset located In India

Debts in relation to assets in India

-deductable

Assets located in India means 1/24/2014 C.A. A.V.HARANATH BABU

10

Ships, Air craft, Motor Car

Lands, Building, Jewellery, Cash

Registration in India

Location / Kept / Use in India

CALCULATION OF TAXABLE NET WEALTH – SEC2(M) Assets belonging to assessee under

sec 2(ea)

Add :Deemed Assets u/s 4

Less :Assets Exempted u/s 5

Gross Wealth

Less : Debts owed in relation to the assets

Taxable Net Wealth

xxxxxx

xxxxxx

(xxxx)

xxxxxx

(xxxxxx)

xxxxxx


11

ASSETS U/S 2(EA)(I)

Any Building or Land appurtenant thereto

Residential or commercial

Farmhouse within 25 kms of municipal limits

and a guest house


12

1

EXCLUSIONS FROM BUILDING CATEGORY 1. Company - Residential House allotted to an

employee, officer or a WTD whose gross annual salary is < Rs. 10.00 L

2. House (residential or commercial) held as stock in trade

3. House which may be occupied for the purpose of own B/P (passive use is sufficeint)

4. Residential property let out for >= 300 days in the P/Y.

5. Commercial establishments or complexes


13

ISSUES

• Incomplete building/building under construction – is not a building

• Building used for conducting meetings – held asset (since used for business)

• Building owned by partner, used by firm for b/p– held used for own business and hence not an asset


14

ILLUSTRATIONS Farm house in 5 acres at a remote village (>25 kms) – not an asset

Residential flats of 1500 sq.ft each provided by a co., to its 3 employees ( salary of 1 employee exceeded Rs.10 L p.a ) - 1 is taxable

House located in Noida shown in WT return for A/y 2012-13 at Rs.40L was sold on 20.03.2013 for Rs.45L but the sale deed thereof was executed on 03.04.2013 – taxable in the hands of transferee (sec 53A of transfer of Property Act)

Guest house (situated in a place which is 30 kms away from the local limits of the municipality) – is an asset

Residential house let out for 200 days – is an asset

Flats constructed, remaining unsold ( not held as stock ) – is an asset


15

ASSETS U/S 2(EA) (II)


16

2

Motor Cars Exclusions

Held as stock in trade

Used for the Business of

Running them on hire eg.,Travels,

cabs, goods transport

ISSUES – MOTOR CAR AS ASSET

Motor Cars includes jeeps & omnibuses

Motor car excludes buses, trucks, tempos.

Car purchased & also took possession, but not registered in the assessees name – includable in the net wealth of the assessee


17

EXAMPLES ON MOTOR CAR AS ASSET

A Chartered Accountant uses his car for professional / personal purposes – is an asset

Imported Motor Car used for hiring – not an asset

Motor Car used for the purpose of business – is an asset


18

ASSETS U/S 2(EA) (III)


19

3

Jewellery

Includes articles made of Gold, Silver, Platinum/ precious metal, Bullion,

diamonds, etc.,

Exclusions

Gold deposit bonds issued under gold deposit scheme,

1999

Held as stock-

in-trade

Note: Jewellery held as Investment – is an asset

ASSETS U/S 2(EA) (IV)


20

4

Yachts, Boats & Aircrafts

Exclusions

•Used for commercial

Purposes •Ship

Note: Aircraft used for business purposes – held, used for commercial purposes

ASSETS U/S 2(EA) (V)


21

5

Urban land

Exclusions

Land on which construction is not permissible

Land occupied by any building constructed with the approval of appropriate authority

Unused land held for industrial purposes for a period of 2 years from the date of

acquisition

Land held as stock-in-trade for a period of 10 years from the date of acquisition

ISSUES – URBAN LAND AS ASSET

• Urban land as defined U/s 2(1A) of Income tax Act,1961. (Refer Notif. No. 9447 dated 6/1/94)

• Once the construction starts on land it looses the character of land, hence outside the purview of land.

• Without making an application for permission to construct a building, it cannot be concluded that construction would not be permitted.

• Rural lands – Not an Asset • Urban agricultural lands- Not an asset.


22

ASSETS U/S 2(EA) (VI)


23

6

Cash on hand

In case of individual/HUF

In excess of Rs.50,000/-

Other persons Amount not recorded in the books of account

Amount receivable (Debtor/advance) is not same as ‘cash in hand’ and hence not an asset

DEBTS OWED IN RELATION TO ASSETS • Debt must be incurred for Acquiring / improving the wealth

related asset. Debt on exempted assets not deductible • Debt in relation to asset clubbed u/s 4 is allowed as

deduction

• Debts owed means it is an obligation to pay an ascertainable sum of money

• Debts owed and payable on valuation date is only deductible.

• Unascertained/contingent liability – not deductible


24

SEC 4 – DEEMED ASSETS

Deemed assets is also known as clubbing provisions

Deemed assets provisions under wealth tax is repetition of sec 60-64 of Income tax Act and deemed owner provisions of Sec 27 of Income tax Act


25

DEEMED ASSETS – SEC 4(1)(A) (I) Assets transferred by individual to spouse

for inadequate consideration


26

exclusions

Assets transferred in connection with an agreement to live apart (including voluntary

agreements)

Assets transferred for adequate consideration

No husband-wife relationship at the time of transfer and on the date of valuation

Taxability - Value of assets clubbed with the transferor wealth

1

DEEMED ASSETS – SEC 4(1)(A) (II) Assets held by minor (Including step minor child /

adopted minor child)


27

2

exclusions

Assets of minor married daughter

Assets acquired out of income of minor’s knowledge & skill

Minor attained majority on valuation date

Assets held by a physically or mentally handicapped minor child u/s 80U

ASSETS HELD BY MINOR - TAXABILITY

Value of assets is clubbed in the hands of parent whose wealth is higher before clubbing minors wealth if marriage subsists. If marriage do not subsist, in the hands of the parent who maintains the minor child.

Any accretion to the assets earned by skill –clubbing attracts.


28

DEEMED ASSETS – SEC 4(1)(A) (III)/(VI)

Assets transferred by individual to any person for inadequate consideration, for the benefit of spouse or sons wife


29

3

exclusions Assets transferred for adequate consideration

Taxability – Value of assets clubbed with the transferor wealth

DEEMED ASSETS – SEC 4(1)(A) (IV)

Assets transferred by individual under revocable transfer to any person


30

4

exclusions Assets transferred under irrevocable transfer

Revocable Transfer means: Transfers revocable within a period of 6 yrs (or) during the lifetime of the beneficiary.

Transfers derives any benefit, directly, or indirectly, from the asset transferred.

Transfer where the transferor has the right to retransfer such assets transferred or its income.

Transfers where the transferor has the right to reassume power over such assets or its income.

DEEMED ASSETS – SEC 4(1)(A) (V)

Assets transferred by individual to sons wife for inadequate consideration


31

5

exclusions

Assets transferred for adequate consideration

No daughter in law relationship at the time of transfer as well as on valuation date

Taxability – Value of assets clubbed with the transferor wealth

DEEMED ASSETS – SEC 4(1)(B)

Share of member of AOP & Share of partner in partnership firm is taxable in the hands of partner.

Since firm/AOP are not liable to Wealth tax, partner/member are liable for their share in firm/AOP


32

5

DEEMED ASSETS – SEC 4(1A)

Assets transferred/converted by individual into joint family property


33

6

exclusions Assets transferred for adequate consideration

Taxability On subsequent partition of HUF– share of spouse in converted

Property to be included in net wealth of individual

DEEMED ASSETS – SEC 4(5A)

Gifts by book entries to anyone with which donor has business relationship.


34

7

exclusions

Money actually delivered at the time of entry.

DEEMED ASSET – SEC 4(6)


35

8

Holder of impartible estate

Deemed asset – Sec 4(7)

Value of house/part thereof leased/allotted to individual by co-operative society

Value considered will be net of outstanding Installment payable to society

DEEMED ASSET – SEC 4(8)(A)


36

9

Possession of building taken/retained in part performance of contract (Sec 53A

of transfer or property Act)

Deemed asset – Sec 4(8)(b) Right with respect to building acquired u/s 269UA(f)

i.e., lease for >= 12 yrs of Income tax Act. (excluding right acquired by way of lease from

month to month for a period not exceeding one year)

DEEMED ASSETS – CASE STUDIES

Property transferred shall be asset u/s 2(ea) both on the date of transfer and on the valuation date.

However the reverse case not applicable (gifted house property & house sold purchased shares)

Only assets transferred should be included and not any accretion to such assets.

When there is inadequate consideration only proportionate clubbing is to be done. (Bombay high court) Contrary view was held in kerala high court.


37

ASSETS EXEMPTED – SEC 5

Sec- 5 is similar to Sec 10 of IT act Exempted assets u/s 5 of Wealth tax Act do

not form part of Net Wealth The burden of proving that the assets are

exempt lies upon the assessee.


38

ASSETS EXEMPTED – SEC 5(I)

Any property held under trust or legal obligation by public charitable/religious trusts


39

1

However exemption will be lost and trust is liable to Wealth tax in case of diversion of income/property to specified persons

or in case of investment in unapproved securities

Business assets of trust will be exempt only when the business carried is incidental to attain its objectives & separate books

of accounts are maintained

ASSETS EXEMPTED – SEC 5(II)

Interest of a member in HUF property


40

2

Since HUF wealth is taxable, members share in HUF wealth is exempt

ASSETS EXEMPTED – SEC 5(III)

Any one building used for the residence by a former ruler


41

3

case studies on sec 5(iii) Where the property is partly self occupied and partly let

out by ex-ruler, self occupied is exempt and let out is taxable

Land appurtenant to palace is also exempt. No matter if land appurtenant is big

Multiple exemption is not available, if one house is availed as exemption u/s 5(iii), no exemption is available for one house or part of house u/s 5(iv)

ASSETS EXEMPTED – SEC 5(IV)

Any heirloom Jewellery in the possession of a ruler


42

4

Conditions to get exemption

Jewellery shall be permanently kept in India and shall not be removed outside India except for a purpose and period approved by the Board

Reasonable steps shall be taken for keeping Jewellery substantially in its original shape

Reasonable facilities shall be allowed to the authorized person to examine the Jewellery as and

when necessary

ASSETS EXEMPTED – SEC 5(V) Exemption in case of citizen of India, person of Indian origin,

who is residing abroad, returning to India with an intention of permanently residing in India


43

5

Exemptions

(i) Value of assets brought to India

(ii) Value of money/cash brought to India

(iii) Balance in NRE A/c on the date of arrival

(iv) Assets acquired out of money of (ii) & (iii) 1 year prior to the date of return or at anytime

thereafter

Any asset acquired out of sale proceeds of an asset brought from abroad, is also exempted

“ORDINARY RESIDING” IN A FOREIGN COUNTRY

The term “ordinarily residing” has not been defined

Madras High Court in the case of Periannan vs CWT has enunciated that:

Ordinarily residing refers to residence of long duration outside India

A person for whom India is a permanent residence cannot claim exemption under this section merely by traveling abroad and residing abroad for a period of one year and thereafter returning to his own country


44

PERIOD OF EXEMPTION – SEC 5(V)

Period of exemption :


45

7 successive assessment years from the next date of his return to India

Condition :

Exemption available only when returned to India. No. of days stay in India and residential status is not relevant

to claim exemption. •Exemption is available only for the assets purchased by Own money.(not with the money sent by others in abroad)

ASSETS EXEMPTED – SEC 5(VI)

Applicable only to Individual & HUF


46

6

One house or part of the house

or

A plot of land not exceeding 500 Sq.mtrs

VALUE OF ASSETS – SEC 7

Part Rule no. Subject matter

A 1&2 1 - valuation as per rules 2-21

2 - various definitions

B 3 - 8 Valuation of immovable property

C 9 – 13 Valuation of shares & debentures (since no longer assets, have been deleted)

D 14 Global valuation of business

E 15 – 16 Valuation of interest in Firm/AOP

F 17 Valuation of Life Interest

G 18 – 19 Valuation of Jewellery

H 20 & 21 Valuation of residuary assets


47

Valuation is determined in the manner laid down in Schedule-III There are 21 rules for valuation of different assets in Schedule-III

VALUATION OF IMMOVABLE PROPERTY – PART B – RULE 3 - 8

Step-1 : Calculation of GMR – Rule - 5 Step-2 : Calculation of NMR – Rule - 4 Step-3 : Capitalization of NMR (CNMR) – Rule - 3 Step-4 : Substitution of NMR (SNMR)–Proviso to

Rule-3 Step-5 : Addition of premium to NMR (ANMR) –

Rule - 6 Step-6 : Adjustment of unearned increase – Rule -

7


48

1

STEP-1: GMR (RULE – 5)


49

Immovable property

Property let out

Higher of ARV Or

MRV

Property not let out

Higher of

FRV

Or

MRV

COMPUTATION OF ARV

Rental value for 12 months (whether let out or not ) XXXXX

ADD :

Municipal taxes (if borne by tenant)

1\9th of actual rent (if Repairs are borne by tenant)

Interest @ 15% p.a on advance rent reduced by actual interest paid (applicable only if advance rent is for > 3 months)

Any Premium on leasehold property over the period of lease

Any benefit or perquisite for leasing the property

Any sum paid by a tenant as obligation

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

Annual Rental Value (ARV) XXXXX


50

STEP-2 : NMR (RULE -4)

Particulars Amount

(Rs.)

GMR XXXXX

LESS :

1. Amount of tax levied by local authority

2. 15% of GMR

XXXX

XXXX

NMR XXXXX


51

STEP-3 : CNMR (RULE – 3)

Sl. No. Particulars

1 If Property is constructed on a freehold land

NMR X 12.5

2 If property is constructed on leasehold land, and on the valuation date, unexpired period of lease is >= 50 years

NMR X 10

Unexpired period of lease is < 50 years NMR X 8


52

STEP-4 – SNMR (PROVISO TO RULE-3) STEP-3 SHALL BE SUBSTITUTED WITH THE FOLLOWING. HOWEVER, THIS IS APPLICABLE IF PROPERTY ACQUIRED/CONSTRUCTED AFTER 31.03.1974 EITHER FOR LEASEHOLD OR FREEHOLD LAND.


53

If COA + COI > CNMR, then SNMR = COA + COI If COA + COI < CNMR, then SNMR = CNMR

Exceptions: For 1 Self occupied residential - 12 months COA + COI <= 50L – KDCM, COA + COI <= 25L – other cities

STEP-6 : ANMR (RULE – 6) Where the un-built area of the plot of the land on which the property is

constructed exceeds the specified area, premium to be added as below:-

Excess of unbuilt area over the specified area Premium to be added

From 1% upto 5% of AA NIL

Above 5% - upto 10% of AA 20% of NMR



Above 20% of AA Rule – 8 is applicable


54

MEANING OF AREAS

Aggregate area = built area + unbuilt area

Specified area means :- 1. 4 metros – 60% of aggregate area 2. Where the property is situated at Agra, Ahmedabad, Allahabad,

Amristar, Bangalore, Bhopal, Cochin, Hyderabad, Indore, Jabalpur, Jamshedpur, Kanpur, Lucknow, Ludhiana, Madurai, Nagpur, Patna, Pune, Salem, Sholapur, Srinagar, Surat, Tiruchirapalli, Trivandrum, Vadodara (Baroda) or Varanasi (Benaras) – 65% of Aggregate area

3. Any other place – 70% of Aggregate area

Unbuilt area means, area on which no building is constructed Note : Built up area of all floors shall be calculated


55

PROCEDURE TO CALCULATE STEP-5 a) Unbuilt area = aggregate area – built area

b) Excess of unbuilt area over specified area i.e. unbuilt area – specified area

c) Determine the percentage of excess unbuilt area on aggregate area

d) Determine the slab, where the percentage falls

e) Apply the % of addition to NMR


56

Value after all these adjustments is the value of immovable property for

freehold lands

STEP-6 ADJUSTMENT OF UNEARNED INCREASE (RULE -7)

Applicable only for constructions on leasehold lands obtained from government or local authority & lease agreement provides for claim

‘Unearned increase’ means

Difference between the value of such land on the valuation date as determined by the government

and

The amount of the premium paid or payable to the government or such authority for the lease of the land


57

QUANTUM OF DEDUCTION

Unearned increase or 50% of value so determined under step-4 i.e.,

SNMR


58

Value arrived under Step-6 will be the value of Immovable property

RULE 8 – SCH-III NOT APPLICABLE IN CERTAIN CASES

AO with the PA- JCWT, is of the opinion that it is not practicable to apply SCh-III; or

Where the difference between the unbuilt area and specified area exceeds 20% of the aggregate area; or

Unexpired lease period <= 15 yrs

---In the above cases Rule-20 applies.


59

RULE-14 – VALUATION OF ASSETS OF BUSINESS

If accounts are maintained regularly, value of assets as disclosed in the balance sheet shall be taken as follows:

1. Depreciable assets - WDV

2. Non – depreciable assets – Book value

3. Closing stock (eg. Urban land held as stock in trade beyond 10 yrs after purchase) - Value adopted for Income tax purposes

4. Assets not disclosed in B/S- Schedule III valuation.


60

2

ISSUES ON RULE-14 – VALUATION OF ASSETS OF BUSINESS

From the balance sheet pick up only assets as per sec 2(ea)

Ignore other assets eg., advance tax, P&L a/c debit balance etc.,

Consider liabilities, used for acquiring assets u/s 2(ea). Ignore reserves, contingent liabilities, etc.,

If value of any asset determined as per provisions of Schedule-III exceeds value as per above table by more than 20% than higher value shall be taken as the value of the asset

Value of assets not disclosed in the balance sheet, to be determined as per the provisions of Schedule-III


61

RULE-15 & 16 – VALUATION OF INTEREST IN FIRM / AOP

1. If the assets belong to the business of the firm / AOP, then value the same as per Rule 14

2. If the assets are not the assets of the business, then value the same as per Sch III

XXXXX

XXXXX

Total Net Wealth of the firm XXXX


62

3

Step I : Valuation of the assets of the firm/AOP


63

Step II : Allocation of the net wealth of the firm among the partners

1. To the extent of capital contribution

2. Any excess above capital contribution

In capital contribution ratio

If any agreement for distribution exists, then as per agreed ratio, otherwise in PSR

The aggregate of the above value shall be the value of interest of a partner/member in the firm/AOP

RULE-18 & 19 – VALUATION OF JEWELLERY

The value of Jewellery shall be estimated to be the price which it would fetch if sold in the open market on the valuation date

The return shall be supported by report of registered valuer FMV <= Rs.5 L (Form No. O-8A) FMV > Rs.5 L (Form No. O-8)

If value determined by valuation officer then that value shall be adopted as the value for subsequent 4 assessment years

For subsequent 4 assessment years Substitute the price of gold, silver or its alloy obtaining on the

respective valuation date Add / deduct value of new purchases / sales


64

5

SEC-16A – REFERENCE TO VALUATION OFFICER

AO may refer to VO in the following conditions :

The valuation is necessary for the purpose of

making an assessment

The market value of the asset is required to be adopted while making such assessment


65

AO may refer valuation of any asset under the following circumstances

In case where the value adopted in the return filed based on the estimate by a registered valuer, which in the opinion of the AO is less than the FMV

In any other case, if the AO is of the opinion:

1. That the FMV of the asset exceeds by 33 1/3 % or Rs.50,000/- over the value of such asset as adopted by the assessee; or

2. That having regard to the nature of the asset and the other relevant circumstances, it is necessary to make a reference

In the above cases , valuation shall be done in accordance with Rule-20.


66

RULE-20

NATURE OF THE ASSET VALUE OF ASSET

Saleable Asset u/s2(ea) 1.Price it would fetch in open market on the valuation date or

2. If referred to valuation officer, then value determined u/s 16 A

Not saleable asset in the open market As per the guidelines or principles specified by the board.


67

ASSESSMENT PROCEDURES

Particulars Wealth Tax Income Tax

Filing of Returns 14(1) 139(1)

Belated / Revised Returns 15 139(4) / (5)

Deemed service of notice 42 292 BB

Presumptions as to assets, BoA, etc.,

42D, 42D(2) 132(4A), 292C

Assessment of persons outside India

22 160 & 163

Immunity from levy of penalty by commissioner

18BA 273AA


68

ASSESSMENT PROCEDURES

Particulars Wealth Tax Income Tax

Immunity from levy of prosecution by commissioner

35GA 278AB

Reversionary powers of commissioner

Application by assessee

Prejudicial to revenue

25(2)

25(1)

264

263

Waiver or reduction of penalty by commissioner :

Suo motto or application by the assessee

Only on application by assessee (note: prior approval of DGIT / CCIT not prescribed in Wealth Tax Act as required in Income Tax Act )

18 B(1)

18 B(4)

273 A(1)

273 A(4)


69

AMENDEMENTS FOR A/Y 2013-14

SEC: 17: TIME LIMIT FOR RE-OPENING – TO

INCLUDE ANY NET WEALTH IN RELATION TO

ANY ASSET ESCAPE & O/S INDIA IS 16 YRS

INSTEAD OF 4YRS.

SEC. 17A: TIME LIMIT FOR COMPLETION OF

ASSESSMENT IS 2 YRS. HOWEVER FOR

REASSESSMENT IT IS ONLY 1 YR.


70

PROPOSALS RELATED TO WEALTH TAX IN DIRECT TAX CODE

Threshold limit for levy of wealth tax has been increased to Rs 50 crore from Rs 30 lakh. However, all the assets (including financial assets, productive assets, business assets, etc.) will be liable to Wealth Tax;

The Companies are proposed to be taken out of the Wealth Tax net.

Rate of Wealth tax is proposed to be reduced from 1% to 0.25%.

The term “assets” for the purpose of Wealth Tax is not separately defined under the DTC. Hence asset, whether held as business asset or investment asset, whether productive or unproductive may be covered.


71

http://www.taxguru.in/direct-tax-code/proposal-related-to-wealth-tax-in-direct-tax-code.html

AIMS OXYGEN PVT. LTD Vs. CWT (2012) (guj)

The land subject to Urban Land act 1976, shall be

valued on the basis of compensation received by

the assessee – but not at FMV.


72

CASE STUDY

Mr.Banerjee inherited a house plot situated in

Kolkata corporation limits, from his deceased father

who had an out standing income tax liability of

Rs.24 lacs. The Property was sold in April,2012 and

the above outstanding liability was collected from

the sale consideration by the Department. Is the

said liability of deceased father a deductible Debt

while considering the net wealth as on 31.3.2013?


73

CASE STUDY

Hrithik Roshan a minor, acting in films, has

amassed wealth of Rs.50 lakhs over a few years

which was held in the form of shares by his father

and guardian,rakesh. The shares was sold in 2012-

13, resulting in capital gain of Rs.15 lakhs which

was invested in a plot of land in Mumbai. The

wealth tax officer proposes to include the value of

the plot in the net wealth of the rakesh U/S.4(1).Is

this in order?


74

THANK YOU

JAI HIND

JAI ICAI


75

Documents

Seminar on WEALTH TAX Act, 1957 - gunturicai.org TAX OVERVIEW-30-07-13.pdf · Seminar on WEALTH TAX Act, 1957 BY C.A. ... assets is also known as clubbing ... the transferor has the