The interpretation of the expression 'belonging to' in the context of property ownership for the purposes of wealth tax.

S. Muralidhar, J.

1. These appeals by the Revenue are directed against a common judgment dated 29th September 2003 passed by the Income Tax Appellate Tribunal (‘ITAT’) in WTA Nos. 180, 181, 431 and 691/Del/96 for the Assessment Years (‘AYs’) 1989-90, 1990-91, 1991-92 and 1985-86, as well as WTA No. 286/Del/98 for AY 1992-93.

2. At the outset, it must be noticed that the impugned common judgment was also passed by the ITAT in WTA No. 1/Del/98 for AY 1992-93 in the appeal filed by the Revenue against another Assessee M/s Pawan Builders (P) Ltd., having its address at 7, Zamrudpur Community Centre, Kailash Colony, New Delhi. However, no appeal appears to have been filed by the Revenue as far as the decision of the ITAT in WTA No. 1 of 1998 is concerned.

Background facts

3. The Respondent Assessee M/s Mohan Exports (I) Ltd. is stated to be the owner of the land and building at 8 and 9, Zamrudpur Community Centre, Kailash Colony, New Delhi. During the assessment proceedings, the Assessing Officer (‘AO’) noted that the Assessee had not disclosed the value of the property in its total taxable wealth. In response to a query raised by the AO in that regard, the Assessee stated that the property in question had not been registered in its name and therefore in terms of the Wealth Tax Act, 1957 (‘WT Act’) the value of the said property could not be added in computing the net wealth of the Assessee.

4. For AY 1985-86, initially the assessment was completed by an order under Section 16(3) of the WT Act for total value at Rs. 1,47,42,259 which included the value of the property at 8 and 9, Zamrudpur Community Centre, Kailash Colony as well as land in Daruhera, District Mahendargarh.

5. In an appeal filed against the said assessment order by the Assessee the Commissioner of Wealth Tax (‘CWT’) set aside the assessment order on the issue of the value of the aforementioned properties and remanded the matter to the AO for a fresh determination. Upon remand, the AO referred the issue concerning the fair market value of both the properties to the valuation officer. By report dated 28th March, 1994 the valuation officer of the Income Tax Department determined the value of the property at 8 and 9, Zamrudpur Community Centre, Kailash Colony, New Delhi at Rs.1,49,50,600. This value formed the basis for computation of the net wealth of the Assessee. The valuation of the land in Daruhera, District Mahendargarh was determined at Rs. 13 lakhs. The AO finalized the fresh assessment order on 30th March 1994 computing the total wealth at Rs. 1,67,36,100.

6. The further appeal filed by the Assessee was allowed by the Commissioner of Income Tax (Appeals) [CIT(A)] by an order dated 30th August 1996. Specific to the property at 8 and 9, Zamrudpur Community Centre, Kailash Colony, New Delhi, the claim of the Assessee was that since on the date of such valuation the Assessee was not yet the legal owner of the property as the lease deed had not been executed by the DDA in favour of the Assessee. Therefore it was not an 'asset' under Section 40 (3) of the Finance Act 1983. The CIT (A) accepted the above plea and held that the value of the land at 8 and 9, Zamrudpur Community Centre, Kailash Colony, New Delhi was not liable to be included in the net wealth of the Assessee as on the relevant date the lease deed had not been executed in favour of the Assessee. The CIT (A) followed the order dated 30th November 1995 passed in the appeals for AYs 1989-90 and 1990-91 in favour of the Assessee.

7. As far as AY 1989-90 is concerned, the AO passed the assessment order on 31st March 1989 holding that notwithstanding that the property had not been formally registered in its name, the Assessee was the real owner of the property. It was held that the decision of the Supreme Court in Nawab Sir Mir Osman Ali Khan v. CWT (1986) 162 ITR 888 was not applicable in the facts of the case. It was further held that the building in any case was covered by Section 40 (3) (vi) of the Financ