CRAVATEX LTD, V. WTO WD 6(2)(4),

MA 653/MUM/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6219 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 1997-1998
• Appeal Filed On: 02-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS ASHIMA GUPTA
• Assessee Lawyers: A V SONDE
• Keywords: Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI PRAMOD KUMA R (A.M) MA NO.653/MUM/2010(ARISING OUT OF WTA NO.42/MUM/03 ),A.Y. 1997-98 MA NO.654/MUM.2010(ARISING OUT OF WTA NO.38/MUM/03) A.Y. 1998-99 CRAVATEX LIMITED, 4 TH FLOOR, 6, SAHAS, 414/2, V.S.MARG, PRABHADEVI, MUMBAI 400 025. PAN:AAACC2734N (APPLICANT) VS. WEALTH TAX OFFICER, WARD 6(2)(4), AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 (RESPONDENT) APPLICANT BY : SHRI A.V.SONDE RESPONDENT BY : SMT. MRS. ASHIMA GUPTA ORDER PER N.V.VASUDEVAN, J.M, THESE ARE MISCELLANEOUS APPLICATIONS FILED BY TH E ASSESSEE PRAYING FOR RECTIFICATION OF CERTAIN APPARENT MISTAKES IN THE C OMMON ORDER OF THE TRIBUNAL DATED 30/6/2010 PASSED IN WTA NO.38/M/03 & WTA NO.42/M/03 FOR ASSESSMENT YEARS 1998-99 AND 1997-98 RESPECTIVE LY. 2. THE FIRST MISTAKE POINTED OUT IN THESE M.A.S I S THAT THE TRIBUNAL FAILED TO CONSIDER THE GROUND WITH REGARD TO NOT ALLOWING RE FUNDABLE SECURITY DEPOSIT TAKEN BY THE ASSESSEE FROM LESSEES OF PROPERTY AS A DEDUCTION AGAINST THE VALUE OF IMMOVABLE PROPERTY UNDER SECTION 2(M) OF T HE W.T. ACT, 1957. 3. WE HAVE PERUSED THE ORDER DATED 30/6/2010 AND FI ND THAT THIS ASPECT WHICH WAS RAISED IN THE FORM OF GROUND NO.5 IN THE ORIGINAL GROUNDS OF APPEAL IN BOTH THE APPEALS HAS NOT BEEN DEALT WITH. TO THIS EXTENT THERE IS A MISTAKE APPARENT FROM THE FACE OF THE RECORD. MA NO.653&654/MUM/2010 2 4. ON THE ABOVE ISSUE THE LD. COUNSEL FOR THE ASSES SEE PRAYED THAT THE SAID GROUND MAY BE DISPOSED BY PASSING SUITABLE OR DERS. WE FIND THAT THE PROVISIONS OF SECTION 2(M) DEFINES NET WEALTH AS FO LLOWS: (M) NET WEALTH MEANS THE AMOUNT BY WHICH THE AGG REGATE VALUE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT OF ALL THE ASSETS, WHEREVER LOCATED, BELONGING TO THE ASSESSEE ON THE VALUATION DATE, INCLUDING ASSETS REQUIRED TO BE INCLUDED IN H IS NET WEALTH AS ON THAT DATE UNDER THIS ACT, IS IN EXCESS OF THE AGGRE GATE VALUE OF ALL THE DEBTS OWED BY THE ASSESSEE[ON THE VALUATION DATE WH ICH HAVE BEEN INCURRED IN RELATION TO THE SAID ASSETS;] A PERUSAL OF THE ABOVE WOULD SHOW THAT FOR CLAIMING DEDUCTION THERE SHOULD BE A DEBT OWED BY THE ASSESSEE IN RELATION TO THE A SSET. ADMITTEDLY THIS SECURITY DEPOSIT WAS RECEIVED FROM THE TENANT TO WH OM THE PROPERTY WAS LEASED. IT CANNOT, THEREFORE, BE SAID TO BE A DEBT OWED BY THE ASSESSEE IN RELATION TO THE ASSET. IN OTHER WORDS, THIS AMOUNT WAS NOT USED TO ACQUIRE THE ASSET BUT WAS RECEIVED AS A DEPOSIT WHEN THE PR OPERTY WAS LET OUT TO THE TENANT. THE CLAIM OF THE ASSESSEE IS, THEREFORE, N OT ACCEPTABLE. TO THIS EXTENT THE ORDER OF THE TRIBUNAL DATED 30/6/2010 WI LL STAND MODIFIED. 5. THE NEXT MISTAKE POINTED OUT IN THE MISCELLANEOU S APPLICATION IS AS FOLLOWS: 6. WHILE DEALING WITH THE GROUND PERTAINING TO TH E VALUATION ASPECT OF THE PROPERTY UNDER CONSIDERATION, AT PAGE 13, PARA 23, OF THEIR ORDER, THE HONBLE MEMBERS HAVE DISPOSED OFF THIS GROUND A S UNDER: WE HAVE CONSIDERED THE ARGUMENT OF THE LEARNED COU NSEL FOR THE ASSESSEE AND ARE OF THE VIEW THAT THE SAME IS WITHO UT ANY MERIT. WE HAVE ALREADY HELD WHILE DECIDING THE FIRST ISSUE THAT THE PROPERTY WAS GIVEN ON LEASE BY THE ASSESSEE AND NOT ON THE BASIS OF LICENSE. THEREFORE THE ABOVE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE ON THE ASSUMPTION THAT THE PROPERTY WAS GIVEN ON A LICENSE AMOUNT BE ACCEPTED. NO OTHE R ARGUMENTS WERE ADVANCED ON THE ASPECT OF VALUATION OF THE PRO PERTIES. WE ARE OF THE VIEW THAT THE REASONS GIVEN BY THE CIT(A ) IN UPHOLDING THE VALUATION BY THE WTO AND THE PARTIAL RELIEF GIV EN BY THE CIT(A) ARE PROPER AND CALLS FOR NO INTERFERENCE. W E ALSO FIND THAT A REGISTERED VALUERS REPORT WAS FILED BY THE ASSES SEE BEFORE CIT(A), WHICH HE DID NOT TAKE COGNIZANCE. WE FIND THAT REPORT IS MA NO.653&654/MUM/2010 3 FOR DETERMINATION OF THE FAIR RENT OF THE PROPERTY. WE ARE OF THE VIEW THAT THIS IS IRRELEVANT FOR THE PRESENT CASE B ECAUSE IF THE ACTUAL RENT RECEIVED IS MUCH HIGHER THAN THE ANNUAL VALUE ASSESSED BY LOCAL AUTHORITY THEN THAT HAS TO BE TAK EN AS LAID DOWN IN RULE 5(I) OF SCHEDULE III TO THE ACT. THE FAIR RENT ESTIMATION IS THEREFORE NOT RELEVANT IN THE PRESENT CASE. FOR THE ABOVE REASONS, WE CONFIRM THE ORDER OF THE CIT(A). 7. THE VALUE OF THE ASSET REFLECTED IN THE RETURN OF INCOME WAS RS.NIL AS AGAINST WHICH THE AO HAS VALUED THE SAME AT RS. 18.32 CRORES FOR A.Y. 1997-98 & RS.17.71 CRORES FOR A.Y. 1998-99 RES PECTIVELY. THE APPLICANT DRAWS ATTENTION TO PAGE 37 OF PAPER BOOK NO.II, FILED ON 21/8/2003 WHEREIN, THE SCOPE OF SECTION 16A OF THE WEALTH TAX ACT PERTAINING TO VALUATION HAS BEEN PLACED. AS PER TH E SAID SECTION REFERENCE BY AN ASSESSING OFFICER(AO) TO THE DVO IS MANDATORY, IN THE EVENT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS 33 1/3 RD % OR RS.50,000/-. IN THIS CONTEXT, THE APPLICANTS COUN SEL HAD ALSO PLACED RELIANCE ON VARIOUS TRIBUNAL & HIGH COURT DECISION S AS UNDER:- A) 76 ITD 318 (HYDERABAD) B) 159 ITR 54 C) 171 ITR 489 (P&H) D) 36 ITD 325 (AHMEDABAD) E) 41 ITD 458 (BOM) F) 5 ITD 508 8. IN THE LIGHT OF WHAT IS STATED IN PARA 7 ABOVE T HE HONBLE TRIBUNALS OBSERVATION THAT NO OTHER ARGUMENTS WER E ADVANCED ON THE ASPECTS OF THE VALUATION OF PROPERTIES, IS FACTUALL Y NOT CORRECT THIS BEING A MISTAKE OF OMISSION WHICH IS APPARENT FROM THE RE CORDS, THE APPLICANT REQUEST THE HONBLE MEMBERS TO PASS SUITA BLE ORDER RECTIFYING THE ABOVE MISTAKE. 6. IN THIS REGARD WE HAVE PERUSED OUR LOG BOOK IN O PEN COURT AND WE FIND THAT NO SUCH ARGUMENTS REGARDING VALUATION OF PROPE RTY WAS ADVANCED ON BEHALF OF THE ASSESSEE. ON THIS ISSUE WE HAVE AGRE ED WITH THE CIT(A). IN PARA 20 OF THE ORDER OF THE TRIBUNAL WE HAVE SET OU T THE ORDER OF THE CIT(A) WHEREBY HE HELD THAT REFERENCE TO DVO UNDER SECTIO N 16A OF THE WEALTH TAX ACT WAS DISCRETIONARY AND THAT HE CANNOT BE COMPEL LED TO MAKE A REFERENCE TO DVO. WE HAVE THEREAFTER CONFIRMED THE ORDER OF THE CIT(A) THEREBY ACCEPTING THE STAND OF THE REVENUE. THEREFORE, THE SECOND MISTAKE POINTED OUT IN THESE MISCELLANEOUS APPLICATIONS, ARE FOUND TO BE WITHOUT ANY MERIT. MA NO.653&654/MUM/2010 4 7. IN THE RESULT, THE MISCELLANEOUS APPLICATIONS AR E ORDERED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 11 TH DAY OF MAR.2011 SD/- SD/- (PRAMOD KUMAR) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 11 TH MARCH.2011 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RJ BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. MA NO.653&654/MUM/2010 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 4/3/2011 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 7/3/2011 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER