THE LAKE PALACE HOTELS and MOTELS LTD. V. THE COMMISSIONER, OF WEALTH TAX and ANR

CW/4401/2010

AI Insights

The case involves multiple writ petitions filed by Lake Palace Hotels and Motels Limited against the Commissioner of Wealth Tax, Udaipur, challenging the rejection of their revision petitions under Section 25 of the Wealth Tax Act, 1957. The revisions pertained to the assessment years 1997-1998 to 2004-2005. The primary legal issue was whether the 'intimation' issued under Section 16(1) of the Wealth Tax Act, which was similar to amendments made in the Income Tax Act, could be considered an 'order' for the purposes of invoking revisional powers under Section 25. The court found that the Commissioner erred in dismissing the revision petitions as not maintainable, emphasizing that the 'intimation' had the effect of being a 'notice of demand' and was appealable, thus supporting the maintainability of the revisions.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 745911 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 08-11-2011
• Assessment Year: misc
• Other Referred Cases: CIT V/s Lake Palace Hotels and Motels Ltd., Lake Palace Hotels and Motels Pvt. Ltd. V/s ACWT
• Laws Referred To: Wealth Tax Act, 1957, Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K K BISSA
• Assessee Lawyers: SANJEEV JOHRI
• Keywords: Intimation; Maintainability; Order; Revision petition; Wealth Tax
• Section: 143(1); 16(1); 25; 2(m)

Judgement Text

"S.B. CIVIL WRIT PETITION NO.4401/2010 – THE LAKE PALACE HOTELS AND MOTELS LTD. V/S THE COMMISSIONER OF WEALTH TAX AND 6 OTHER CONNECTED WRIT PETITIONS ORDER DTD:8.11.2011 1/9 1. S.B. CIVIL WRIT PETITION NO.4401/2010 The Lake Palace Hotels and Motels Limited V/s The Commissioner of Wealth Tax, Udaipur. 2. S.B. CIVIL WRIT PETITION NO.4403/2010 The Lake Palace Hotels and Motels Limited V/s The Commissioner of Wealth Tax, Udaipur. 3. S.B. CIVIL WRIT PETITION NO.4402/2010 The Lake Palace Hotels and Motels Limited V/s The Commissioner of Wealth Tax, Udaipur. 4. S.B. CIVIL WRIT PETITION NO.4404/2010 The Lake Palace Hotels and Motels Limited V/s The Commissioner of Wealth Tax, Udaipur. 5. S.B. CIVIL WRIT PETITION NO.4405/2010 The Lake Palace Hotels and Motels Limited V/s The Commissioner of Wealth Tax, Udaipur. 6. S.B. CIVIL WRIT PETITION NO.4406/2010 The Lake Palace Hotels and Motels Limited V/s The Commissioner of Wealth Tax, Udaipur. 7. S.B. CIVIL WRIT PETITION NO.4407/2010 The Lake Palace Hotels and Motels Limited V/s The Commissioner of Wealth Tax, Udaipur. Date of order : 8th November, 2011 PRESENT HON'BLE DR. JUSTICE VINEET KOTHARI Mr.Sanjeev Johri, for the Assessee. Mr.K.K.Bissa, for the Revenue. --------- 1. By these writ petitions, the petitioner – Lake Palace Hotels and Motels Limited, Udaipur has challenged the order of the Commissioner of Wealth Tax, Udaipur rejecting the revision petition S.B. CIVIL WRIT PETITION NO.4401/2010 – THE LAKE PALACE HOTELS AND MOTELS LTD. V/S THE COMMISSIONER OF WEALTH TAX AND 6 OTHER CONNECTED WRIT PETITIONS ORDER DTD:8.11.2011 2/9 under Section 25 of the Wealth Tax Act, 1957 for the assessment years 1997-1998, 1999-2000, 2000-2001, 2001-2002, 2002-2003, 2003-2004 and 2004-2005. The Commissioner of Wealth Tax held that the revision petition under section 25 of the Wealth Tax Act against intimation issued under Section 16(1) of the Act is not an 'order' and therefore, the revision petition under Section 25 of the Act is not maintainable. Being aggrieved by the same, the petitioner – assessee has approached this Court by way of present writ petitions. 2. The learned counsel for the petitioner, Mr. Sanjeev Johri urged that section 25 of the Act of 1957 permits the revision by Commissioner of an order which has been passed by any authority subordinate to him and the learned Commissioner may either on his own motion or on an application made by the assessee in this behalf, call for the record of any proceedings under this Act and revise such orders on the stated grounds. He submitted that the learned Commissioner of Wealth Tax has fallen into error in rejecting the contention of the assessee that akin to Section 16(1) of the Act, the provisions of section 143(1) of the Income Tax Act, 1961 were amended by Finance Act (No.2 of 1991) and again on 1.6.1994 by Finance Act of 1994 which was ultimately omitted with effect from 1.6.1999 by Finance Act, 1999 and 'intimation' sent to the assessee, inter alia under Section 143(1)(a) of the Income Tax Act would be deemed to be an 'order' between the period from 1.10.1991 to S.B. CIVIL WRIT PETITION NO.4401/2010 – THE LAKE PALACE HOTELS AND MOTELS LTD. V/S THE COMMISSIONER OF WEALTH TAX AND 6 OTHER CONNECTED WRIT PETITIONS ORDER DTD:8.11.2011 3/9 31.5.1999. He submitted that similar amendments were also made in Wealth Tax Act and therefore, the learned Commissioner has erred in holding that assessment periods in question even though falling outside the period from 1.10.1991 to 30.5.1999, such intimation were not orders and therefore, the revision petitions were not maintainable. He, therefore, prayed that the impugned orders dtd.31.3.2010 passed by the learned Commissioner of Wealth Tax deserve to be set aside. 3. On the other hand, the learned counsel for the Revenue, Mr.K.K.Bissa submitted that the impugned order is justified and an 'intimation' cannot be construed as an 'order' since the amendment in law was not in force in the assessment periods in question. He, however, fairly submitted that Section 143(1)(a) of the Income Tax Act was amended to construe such 'intimation' as an 'order' for the assessment years in question as given in the order by the learned Commissioner and even the appeal against such 'intimation' was maintainable before the Appellate Authority under Section 246A of the Income Tax Act. He also submitted that section 16 of the Wealth Tax Act also provides that such 'intimation' shall have effect or being notice for demand and shall be enforced for recovery of Wealth Tax dues, if any. 4. The bone of contention between the parties in the present case is as to whether the interest bearing security deposit taken by the S.B. CIVIL WRIT PETITION NO.4401/2010 – THE LAKE PALACE HOTELS AND MOTELS LTD. V/S THE COMMISSIONER OF WEALTH TAX AND 6 OTHER CONNECTED WRIT PETITIONS ORDER DTD:8.11.2011 4/9 assessee – the Lake Palace Hotels and Motels Ltd. from M/s East India Hotel Limited, which was refundable after a period of lease of 72 years and it was a debt deductible, while computing the net wealth of assessee under Section 2(m) of the Act or not and the High Court had already held in favour of the assessee that said debt of Rs.2.5 crores was a deductible liability from the valuation of the assets for determining the 'net wealth' of the assessee and copies of one such order of ITAT in WTA No.05/JU/2002 for assessment year 1998-1999 – Lake Palace Hotels and Motels Pvt. Ltrd. V/s ACWT dtd.4.11.2004 and the Division Bench order dt.2.7.2008 in appeal No. 1/2008 have been placed on record before this Court in support of this contention. 5. It appears that that the issues about deduction of this debt for determining the net wealth under Section 2(m) of the Act has been finally decided. The ITAT in its order dtd. 4.11.2004 delivered in WTA No. 05/Ju/2002 (A.Y.1998-1999) in the case of assessee himself in para 20 and 21 held as under: “This is undeniable fact that the lease money is in the form of security. Both CWT(A) and WTO have accepted this deposit as 'security deposit'. This has to be refunded back with interest. We reproduce Clause (15.3) of this agreement: “That as stipulated hereinabove, the Lake Palace S.B. CIVIL WRIT PETITION NO.4401/2010 – THE LAKE PALACE HOTELS AND MOTELS LTD. V/S THE COMMISSIONER OF WEALTH TAX AND 6 OTHER CONNECTED WRIT PETITIONS ORDER DTD:8.11.2011 5/9 Hotels and Motels Pvt. Limited will pay interest @9% per annum simple from the cate of receipt of payment. That the interest will be charged and payable on first day of May of each year for the previous year. That the principal amount of the said Advance Lease Deposit shall be payable in 10 yearly instalments of Rs.25 lakhs each from 1.5.2055. The Lake Palace Hotels and Motels Pvt. Limited undertakes, declared and confirms that it shall promptly pay the interest and the year installments as and when due, failing which EIH is authorized to adjust and appropriate the interest and installment due from the lease rent payable by EIH to the Lake Palace Hotels and Motels Pvt. Limited as per the terms of this Lease Agreement”. 21. For A.Y. 1996-97 and 1994-95 the same issue was restored back to the file of the Assessing Officer with a direction to adjudicate the same in accordance with law, after affording due and reasonable opportunity of being heard to the assessee. So, after following the Tribunal order, we also restore this issue on the same lines to the Assessing Officer.” 6. The High Court in its order Dtd. 2.7.2008 in WTA No.1/2008 - CIT V/s Lake Palace Hotels and Motels Ltd. held as under: S.B. CIVIL WRIT PETITION NO.4401/2010 – THE LAKE PALACE HOTELS AND MOTELS LTD. V/S THE COMMISSIONER OF WEALTH TAX AND 6 OTHER CONNECTED WRIT PETITIONS ORDER DTD:8.11.2011 6/9 “WEALTH TAX APPEAL NO.1 of 2008 CIT, Udaipur v/s Lake Palace Hotels & Motels Ltd. Mr.K.K. Bissa, for the appellant/petitioner. Date of Order : 2.7.2008 HON'BLE SHRI N.P. GUPTA, J. HON'BLE HRI KISHAN SWAROOP CHAUDHARY,J ORDER Heard learned counsel for the appellant. We have perused the impugned order of the learned Tribunal. The learned Tribunal has found that the amount of Rs.2.5 crores is received by the assessee as a deposit, which bears interest @9% and is liable to be refunded in accordance with the terms of the lease-deed. Thus, the amount definitely has a direct nexus with the land in question, and is required to be excluded, on the face of the language of Section 2(m) of the Wealth Tax Act. In our view, the finding recorded by the learned Tribunal is fully in accordance with law, and does not require any interference, as it does not give rise to any substantial question of law. The appeal thus, has no force, and is dismissed summarily. Sd/- sd/- (KISHAN SWAROOP CHAUDHARY)J. (N.P. GUPTA)J.” 7. However, for assessment years in question, namely, assessment years 1997-1998, 1999-2000, 2000-2001, 2001-2002, 2002-2003, 2003-2004 and 2004-2005, since the said deduction was not given by the Assessing Officer while issuing 'intimation' (order) S.B. CIVIL WRIT PETITION NO.4401/2010 – THE LAKE PALACE HOTELS AND MOTELS LTD. V/S THE COMMISSIONER OF WEALTH TAX AND 6 OTHER CONNECTED WRIT PETITIONS ORDER DTD:8.11.2011 7/9 under Section 16 of the Act, the assessee preferred revision petition before the learned Commissioner of Wealth Tax which came to be dismissed as not maintainable by the impugned order dtd.31.3.2010. Hence the present writ petitions. Therefore, the limited question before this Court in these writ petitions is as to whether the revision is maintainable under Section 25 of the Act against an 'intimation' under Section 16(1) or not and whether such an 'intimation' is an 'order' or not. 8. Having heard the learned counsels, this Court is of the opinion that the learned Commissioner of Wealth Tax has erred in dismissing the revision petition as not maintainable. The 'intimation' issued under Section 16(1) of the Wealth Tax, which is reproduced below has the effect of being a 'notice of demand' issued under Section 16 and remaining provisions of this Act including the appeal and revisional powers shall apply mutatis mutandis to 'intimation' under Section 16(1) of the Act also. Section 16(1) reads as under: “16. Assessment : (1) Where a return has been made under section 14 or section 15 or in response to a notice under clause (i) of sub-section (4):- (i) if any tax or interest is found due on the basis of such return, after adjustment of any amount paid by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable and such S.B. CIVIL WRIT PETITION NO.4401/2010 – THE LAKE PALACE HOTELS AND MOTELS LTD. V/S THE COMMISSIONER OF WEALTH TAX AND 6 OTHER CONNECTED WRIT PETITIONS ORDER DTD:8.11.2011 8/9 intimation shall be deemed to be a notice of demand issued under section 30 and all the provisions of this Act shall apply accordingly and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee and an intimation to this effect shall be sent to the assessee: Provided that except as otherwise provided in this sub-section, the acknowledgment of the return shall be deemed to be intimation under this sub-section where either no sum is payable by the assessee or no refund is due to him: Provided further that no intimation under this sub- section shall be sent after the expiry of two years from the end of the assessment year in which the net wealth was first assessable.” 9. Undoubtedly, the said 'intimation' is an appealable 'order' under the provisions of Section 23 and 23A of the said Wealth Tax Tax, 1957. If any intimation/order is appealable before the first appellate authority, there is no reason why the Commissioner cannot invoke his revisional powers under Section 25 of the Act which confers upon him suo moto revisional powers as well as powers to be invoked on the application made by the assessee. He can call for the record of any proceedings under this Act, if an order has been passed by any authority subordinate to him and may make such enquiry or cause such enquiry to be made and pass such order thereon as the Commissioner thinks fit. The learned Commissioner has therefore, S.B. CIVIL WRIT PETITION NO.4401/2010 – THE LAKE PALACE HOTELS AND MOTELS LTD. V/S THE COMMISSIONER OF WEALTH TAX AND 6 OTHER CONNECTED WRIT PETITIONS ORDER DTD:8.11.2011 9/9 clearly erred in holding that the amendment in the Income Tax Act to the effect that an 'intimation' was an 'order' for the limited period only and consequently holding that since those amendments were not applicable for the assessment years in question, therefore, the revision petitions were not maintainable. This escape route found by the learned Commissioner cannot be countenanced. In the opinion of this Court, the revision petitions before the learned Commissioner were clearly maintainable in law and he has erred in rejecting the said revision petitions as not maintainable. 10. Accordingly, all these writ petitions are disposed of setting aside the impugned order of the Wealth Tax Commissioner dtd.31.3.2010 and the revisions are restored back to him for decision afresh on merits in accordance with law. No order as to costs. [ DR. VINEET KOTHARI ], J. item No.40-46 ss/- "