M/s. Twills Clothing Private Limited, Vijayawada V. The Assistant Commissioner of Wealth Tax, Circle-3(1), Vijayawada

CO 19/VIZ/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5123 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-02-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 18-03-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Valuation report
• Section: 43CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM (Through web-based video conferencing platform) BEFORE SHRI DUVVURU R L REDDY, HON’BLE JUDICIAL MEMBER & SHRI S. BALAKRISHNAN, HON'BLE ACCOUNTANT MEMBER W.T.A. No. 13/VIZ/2019 (Asst. Year : 2012-13) ACWT, Circle-3(1), Vijayawada. Vs. M/s. Twills Clothing Pvt. Ltd., D.No. 11-25-326, Vinnakota vari street, K.T. Road, Vijayawada. (Appellant) PAN No. AACCT 6776 F (Respondent) C.O.No. 19/VIZ/2021 (Arising out of W.T.A. No. 13/VIZ/2019) (Asst. Year : 2012-13) M/s. Twills Clothing Pvt. Ltd., D.No. 11-25-326, Vinnakota vari street, K.T. Road, Vijayawada. Vs. ACWT, Circle-3(1), Vijayawada. PAN No. AACCT 6776 F (Applicant) (Respondent) Assessee by : Shri G.V.N. Hari, Advocate. Department by : Shri S.P.G. Mudaliar, Sr.DR Date of hearing : 08/02/2022. Date of pronouncement : 23/02/2022. 2 WTA No. 13/VIZ/2019 C.O.No. 19/VIZ/2021 (M/s. Twills Clothing Pvt. Ltd.) O R D E R PER S. BALAKRISHNAN, ACCOUNTANT MEMBER: This appeal by the Revenue and the cross objection by the assessee are directed against the order of Commissioner of Wealth Tax (Appeals) [for short, “CWT(A)”], Vijayawada in order No.242/CWT(A)/VJA/16-17, dated 13/08/2019 for the A.Y. 2012-13. 2. The Revenue has raised the following grounds of appeal:- “1. The Ld. CWT(A) is not justified in allowing the appeal without taking into account the facts and merits of the case. 2. The Ld. CWT(A) ought to have adopted the market value of the property as the assessees case is squarely hit by the provisions of Rule 14(2)(b) of the Schedule III to Wealth Tax Act r.w.Rule 20(1). 3. The CWT(A) ought to have appreciated the fact that the assessee itself agreed for the valuation of the site and submitted to the Vysya Bank while availing loan. Such being the case, the CWT(A) ought to have adopted the fair market value of the land at Rs.3,07,00,000/- as adopted and submitted by the assessee instead of adopting the value as fixed by the Sub-Registrar by relying on the provisions of Section 50C, Section 43CA and Section 56(2)(vii)(b) of the II Act, 1961. 4. Any other grounds that may be urged at the time of hearing. Beside the merits in facts and in law, it is also submitted that there is a RAP objection in the case which has been accepted by department. For these and other grounds that may be urged at the time of appeal hearing, it is prayed that additions made may be restored.” 3. Brief facts of the case are that assessee-company is engaged in the business of manufacturing and marketing of readymade garments, filed its wealth tax return for the A.Y. 2012-13 by admitting taxable wealth of Rs. 1,08,13,000/- in response to the notice issued u/sec. 17(1) of the Wealth Tax Act (for short, “Act”). 3 WTA No. 13/VIZ/2019 C.O.No. 19/VIZ/2021 (M/s. Twills Clothing Pvt. Ltd.) Subsequently, a notice u/sec. 16(2) of the Act was issued to the assessee. The assessee disclosed urban land at Kanuru, Vijayawada while filing the wealth tax return for the A.Y. 2012-13 valuing the same at Rs. 95,26,790/- as per the value stated in its books of account. The AO, based on the valuation report given to ING Vysya Bank for the loans taken by it, observed that the land is valued at Rs. 3.07 crores. The AO treated the same as fair market value. Accordingly, the difference of Rs. 2,11,73,710/- was added to the total wealth of the assessee. 4. Being aggrieved by the order of the AO, the assessee filed an appeal before the ld.CWT(A). The ld.CWT(A) based on the written submissions filed by the assessee and the certificate issued by the Sub-Registrar, Patamata as on 31/03/2012, adopted the value of the urban land at Rs. 95,83,200/-, concluded that since the fair market value of the land as per Rule 20 of Schedule III does not exceed 20% of the book value as per Rule 14(2)(a) filed by the assessee, the provisions of Rule 14(2)(b) are not applicable and therefore deleted the addition of Rs.2,11,73,710/-. Aggrieved by the order of the ld.CWT(A), the revenue is in appeal before this Tribunal. 5. Ld.AR argued that the urban land being non-depreciable asset is covered by Rule 14(2)(a)(ii). Ld.AR further argued that valuation report is dated 19/12/2012 and cannot be applied for the valuation of the asset as on 31/03/2012, which is the date of valuation as per Wealth Tax Act. 6. On the contrary, ld.DR argued that the provisions of Rule 20 shall be applicable for the valuation of the urban land and then fair 4 WTA No. 13/VIZ/2019 C.O.No. 19/VIZ/2021 (M/s. Twills Clothing Pvt. Ltd.) market value as per the certificate submitted to bank should be adopted for wealth tax purpose. 7. We have heard both the parties and perused the material available on record. There is no dispute on the fact that the value of the urban land is disclosed in the books of account of the assessee and no depreciation has been claimed by the assessee. Since the land is an asset on which no depreciation is admissible, the book value of the said land is required to be considered as the value of the asset for wealth tax purposes as per the provisions of Rule 14(2)(a). Therefore, we find no infirmity in the order passed by the ld.CWT(A) and the appeal of the revenue is dismissed. 8. The cross objection filed by the assessee is in support of the order of the ld.CWT(A). As there is no allegation against the order of the ld.CWT(A), the cross objection filed by the assessee has become infructuous and is dismissed accordingly. 9. In the result, appeal filed by the Revenue and the cross objection filed by the assessee are dismissed. Order Pronounced in open Court on this 23 rd day of Feb., 2022. sd/- sd/- (DUVVURU R L REDDY) (S. BALAKRISHNAN) Judicial Member Accountant Member Dated: 23 rd Feb., 2022. vr/- 5 WTA No. 13/VIZ/2019 C.O.No. 19/VIZ/2021 (M/s. Twills Clothing Pvt. Ltd.) Copy to: 1. The Assessee - M/s. Twills Clothing Pvt. Ltd., D.No. 11- 25-326, Vinnakota vari street, K.T. Road, Vijayawada. 2. The Revenue – ACWT, Circle-3(1), Vijayawada. 3. The Pr.CWT, Vijayawada. 4. The CWT(A), Vijayawada. 5. The D.R., Visakhapatnam. 6. Guard file. By order (VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.