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Computation of Net wealth....

Vikas Gupta (CHARTERED ACCOUNTANT) (16295 Points)

26 June 2011

1. Compute the net wealth of Rajan , a resident individual ,as on 31st March 2011 from the following particulars:
i. He has a house property at Delhi valued at 2000000 which is used for business purposes.
ii. Vehicles for Personal use- motor car :Rs.840000; motor Van : 450000 and Jeep :Rs.354000
iii. Cash in Hand: 350000
iv. Jewellery : 1560000
v. He had transferred an urban house plot in February 2011 in favour of his niece, which was not revocable during her life time. His niece died on 14th march,2011 and Rajan could get the title of plot re transferred to his name on 15th April,2011.Market Value of House plot as on 31st March, 2011 is 1410000

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(Guest)

Calulation of net wealth:-

House property used for business (not an asset U/S-2(ea)) = nil

Motor Car = 840000

Motor Van ( Heavy goods vehicle isnot an asset U/S-2(ea)) = nil

Jeep = 354000

Cash in hand (in excess of 50000/-) = 300000

Jewellery (assumed as not held as a stock in trade) = 1560000

Urban House (taxable only when power to revoke arises u/s 4(5)) = 1410000

Total =4464000

less : Exemption (u/s-5 (vi))(assuming as house is not exceeding

500 sq.m) = (1410000)

Net Wealth = 3054000

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C.A. Jignesh N. Mehta (C.A.) (1030 Points)
Replied 26 June 2011

Originally posted by : S. VIJAY NARENDRA
	Calulation of net wealth:- House property used for business (not an asset U/S-2(ea)) = nil Motor Car = 840000 Motor Van ( Heavy goods vehicle isnot an asset U/S-2(ea)) = nil Jeep = 354000 Cash in hand (in excess of 50000/-) = 300000 Jewellery (assumed as not held as a stock in trade) = 1560000 Urban House (taxable only when power to revoke arises u/s 4(5)) = 1410000 Total =4464000 less : Exemption (u/s-5 (vi))(assuming as house is not exceeding 500 sq.m) = (1410000) Net Wealth = 3054000

AGREED.....

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Jeet Biswas (ACMA (in Service)) (5073 Points)
Replied 26 June 2011

As the niece died on 14th March 2011 i.e before 31st march 2011, the transfer became revocable and hence is to be included in the Net Wealth computation subject to exemption u/s 5(vi), as correctly demonstrated by Mr.VIJAY.

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Ravikant (Accountax) (6285 Points)
Replied 26 June 2011

i) Not an asset as it is used for business purpose NIL

ii) All 3 Vehicles are taxable (as Motor car includes Jeep and Van) 1644000

iii) cash in hand = 3,00,000 is taxable 300000

iv) jewellery = 15,60,000 is taxable 1560000

v) Urban Land is taxable

(as power to revoke arises before valuation date) 1410000

Exemption of value of land can be claimed u/s 5(vi) -1410000

(if it is upto 500 sq metres)

Net Wealth 3504000

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Ravikant (Accountax) (6285 Points)
Replied 26 June 2011

S. Vijay Narendraji should have included Motor Van as taxable asset,

as the definition of Motor Car u/s 2(ea) includes motor car defined in Motor Vehicles Act, 1988, which includes Jeep and Motor Van.

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(Guest)

@ Ravikant

As I m not concerned abt Motor vehicle Act at all..

since I mentioned a note that for wealth tax purpose heavy goods vehicle will not b included in the net wealth. Hence if Motor van is not a part of heavy goods vehicle .Then it will b taxable .

so here ur objection is correct.

thanks Mr.Ravikant to giving this information.

But i wants 2 say one more thing 2 all of u that in exams in these type of circumstances ASSUMPTION plays a very important role 2 avoid the examiner from deducting ur marks.....So plz mention a note in exam.

any other views r welcomed.

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CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert) (85930 Points)
Replied 26 June 2011

Originally posted by : S. VIJAY NARENDRA
	@ Ravikant t As I m not concerned abt Motor vehicle Act at all.. since I mentioned a note that for wealth tax purpose heavy goods vehicle will not b included in the net wealth. Hence if Motor van is not a part of heavy goods vehicle .Then it will b taxable . so here ur objection is correct. thanks Mr.Ravikant to giving this information. But i wants 2 say one more thing 2 all of u that in exams in these type of circumstances ASSUMPTION plays a very important role 2 avoid the examiner from deducting ur marks.....So plz mention a note in exam. any other views r welcomed.