Law: Wealth Tax Act, (XV of 1963)

Section: 2,2(1)(5)(ii),16(2),17

Wealth Tax Act (XV of 1963)---Ss. 2(1)(5)(ii) Explanation, 16(2) & 17---C.B.R. Circular No.568-S (WT)/80, dated 20-9-1980---Finance Act (III of 1998), Preamble---Assets, held for purposes of business of construction and sale or letting out---Sale of land by the legal heirs in order to keep the commitment of their father---Purchaser, advertised commercial projects for construction and sale of shops and flats on such land---Fifteen acres of land left with legal heirs on which Drive-In-Cinemas and poultry farm existed from which business income derived was being regularly assessed---Assessments of the legal heirs were completed for income-tax as well as wealth tax---Assessing Officer of another circle issued notices under S.17/16(2) of the Wealth Tax Act, 1963 in the status as an Association of Persons for the land of 15 acres, on the ground of "sale of land" which was residential and commercial and that on the earlier land sold, projects of construction and sale were undertaken by the purchaser and therefore, the intention of the assessees was to sell land for commercial purposes falling under Explanation to S.2(5)(ii) of the Wealth Tax Act, 1963---Taxation---Assessee contended that property was not held for purpose of business of construction and sale or letting out as their deceased father had always declared their properties for self use---Sale was completed as agreement to sell was made by their deceased father---If at all any action was warranted, notices could be issued in the case of deceased through legal heirs---Notices issued were time barred---Notices treating the legal heirs as Association of Persons were illegal as charge of wealth in the case of an Association of Persons was dependent on the existence of the events mentioned in S.2(1)(5)(ii) of the Wealth Tax Act, 1963---Validity---Assessing Officer had failed to establish that the assesses had let out the property or the property was being held for the purpose of construction and sale or letting out---Intention could not be taxed and the conduct at the time of assessment had to be considered---Department had not been able to bring on record or even point out that the assessees/appellants had…

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