[Aims Oxygen Pvt. Ltd. v. CIT; 345 ITR 456 (Guj.) (FB):]
The assessee owned certain open land which was the subject of the Urban Land (Ceiling and Regulation) Act, 1976. For the A. Ys. 1988-89 to 1990-91, the Tribunal had held that for the purposes of wealth tax, the valuation of the land in excess of the limit laid down under the 1976 Act had to be made on the basis of the compensation which the assessee would be entitled to receive under the 1976 Act. For the A. Y. 1991-92, the Tribunal directed the Assessing Officer to value the light in the light of the above decisions for the earlier years. The Assessing Officer valued the land at market value on the basis of the report of the Departmental Valuation Officer. The Tribunal confirmed the order of the Assessing Officer.
On appeal by the assessee, the Gujarat High Court reversed the decision of the Tribunal and held as under:
“i) The land of the assessee was acquired as early as in 1960. The land in question was declared surplus land under the 1976 Act, which had a depressing effect on the value of the asset. The valuation has to be made on the basis of the assumption that the purchaser would be able to enjoy the property as the holder, but with restrictions and prohibitions contained in the 1976 Act and in such case value of the property or land would be reduced.
ii) The Department, having already accepted the depressed valuation for the A. Ys. 1988-89 to 1990-91 and then for the A. Y. 1991-92, it was not open to the department to assess the property on the basis of the market value, without any restriction or prohibition.
iii) The Tribunal is incorrect in holding that the land should be valued in accordance with the open market rate, without any restriction and prohibition.
iv) Whenever there is any restriction on transfer of any land, the value of the property or land, as the case may be, would be normally reduced and the valuation is to be ascertained, taking note of the restrictions and prohibitions contained in the Ceiling Act as if the land is notified as excess land.
v) Once the competent authority issues any notification u/s. 10(1) or (3) of the Land Ceiling Act, the land has to be deemed to have been acquired by the Government and what the assessee owned was the right to compensation and in such case, the compensation amount would only be the maximum compensation as provided under the Ceiling Act which is to be taken into consideration.”
