ACIT, CHENNAI V. MSK Constructions P Ltd., CHENNAI

MA 8/CHNY/2013

• Counselvise Citation: [2013] 123 COUNSELVISE.COM (IT) 9962 (ITAT-CHENNAI)
• Duration Of Justice: 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 1997-1998
• Appeal Filed On: 26-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: S SRIDHAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH CHENN AI BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI V.DURGA RAO, JUDICIAL MEMBER .. M.A. NO.08 & 09/MDS./2013 (IN WTA NOS.15 & 16/MDS./11 ASSESSMENT YEARS:1997-98 & 1998-99 & WTA NOS.15 & 16/MDS./11 A. YS:1997-98 & 1998-99 ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(3), AAYAKAR BHAVAN, MAIN BUILDING, IV FLOOR, 21 M.G.ROAD, NUNGAMBAKKAM, CHENNAI 600 034. VS. M/S.MSK CONSTRUCTIONS P LTD., A-2,UMA SHANTHI RESIDENCY, HABIBULLAH ROAD, T.NAGAR, CHENNAI 600 017. PAN AAACM 2608 R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N. MADHAVAN, JCIT D.R. RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE DATE OF HEARING : 15 .03.13 DATE OF PRONOUNCEMENT : 21. 03.13 MP.08/09 /MDS/13 MSK CONSTRUCTION 2 O R D E R PER ABRAHAM P GEORGE, ACCOUNTANT MEMBER : IN THESE MISCELLANEOUS PETITIONS FILED BY THE RE VENUE, ITS GRIEVANCE IS THAT TRIBUNAL HAD DECIDED ONLY A PART OF THE GROUNDS RAISED BY IT, NOT ADJUDICATING THE OTHER PART, RESU LTING IN A POSITION WHEREBY ASSESSING OFFICER IS UNABLE TO PASS ORDERS BASED ON THE TRIBUNAL DIRECTIONS. 2. LD. D.R, IN SUPPORT OF THE MISCELLANEOUS PETITI ONS SUBMITTED THAT VALUE OF 15 GROUNDS OF URBAN LAND OWNED BY THE ASSESSEE WAS DETERMINED AT ` 6.84 CRORES BY WEALTH TAX OFFICER INITIALLY. THESE WERE CONFIRMED BY THE CWT(A). ON FURTHER APPE ALS FILED BY THE ASSESSEE, THIS TRIBUNAL VIDE ITS ORDER DATED 22 .04.08 HAD REMITTED THE ISSUE AFRESH TO THE FILE OF THE WEALTH TAX OFFICER. THEREAFTER, THE WEALTH TAX ASSESSMENTS WERE DONE AG AIN WHEREIN 20% OF REDUCTION IN THE VALUE WAS GIVEN FOR DEPRESS ING FACTORS EXPLAINED BY THE ASSESSEE. NOT SATISFIED, ASSESSEE MOVED IN APPEAL BEFORE THE CWT(A), WHO HELD THAT ENTIRE 15 GROUNDS FELL OUTSIDE THE PURVIEW OF DEFINITION OF AN ASSET UNDER SECTION 2(EA)(VI) OF THE WEALTH TAX ACT, 1957 (IN SHORT TH E ACT). CWT(A) ALSO GAVE A FINDING THAT 4 GROUNDS OF LAND OF T HE TOTAL 15 MP.08/09 /MDS/13 MSK CONSTRUCTION 3 GROUNDS WERE RESERVED AREA ON WHICH CONSTRUCTION WA S NOT POSSIBLE. AS PER LD. D.R, REVENUE HAD FILED APPEAL S AGAINST ORDERS OF CWT(A) AND THIS TRIBUNAL HAD HELD THAT CW T(A) WAS JUSTIFIED IN EXCLUDING 4 GROUNDS FROM THE TOTAL 15 GROUNDS WHILE VALUING THE ASSETS FOR WEALTH TAX PURPOSE. AS PER LD. D.R., THERE WAS A GROUND RAISED BY THE REVENUE WITH REGARD TO THE DECISION OF LD.CIT(A) THAT ALL THE 15 GROUNDS WERE TO BE EXC LUDED, BUT THIS WAS NOT DEALT WITH BY THE TRIBUNAL. ACCORDING TO H IM, TRIBUNAL HAD DEALT ONLY WITH THE ASPECT OF 4.5 GROUNDS LEAVI NG THE ISSUE OF CHARGEABILITY OF WEALTH TAX ON THE BALANCE AREA UNT OUCHED. ON MERITS, LD. D.R SUBMITTED THAT ATTACHMENT OF THE PR OPERTY STATED BY THE CWT(A) AS A REASON FOR EXCLUDING IT FROM TH E PURVIEW OF THE ACT WAS ONLY A TEMPORARY ONE. ACCORDING TO HIM , OWNERSHIP OF THE PREMISES WAS ABSOLUTELY VESTED WITH THE ASSE SSEE. FOR THE DEPRESSING FACTORS, ASSESSING OFFICER HAD GIVEN 20 % DISCOUNT FROM THE GUIDELINE VALUE. RESTRICTIONS PLACED ON T HE PROPERTY BY CHIEF JUDGE SMALL CAUSES, MADRAS WAS LIFTED BY HON BLE MADRAS HIGH COURT ON 28.04.98. THEREFORE, ACCORDING TO HI M, THERE WAS NO SCOPE FOR EXCLUDING SUCH URBAN LAND FROM THE DEF INITION OF ASSET GIVEN UNDER SECTION 2(EA)(VI) OF THE ACT. LD . CIT(A) FELL IN ERROR IN GIVING A TOTAL EXEMPTION TO THE ASSESSEE. MP.08/09 /MDS/13 MSK CONSTRUCTION 4 3. PER CONTRA, LD. AUTHORISED REPRESENTATIVE OF AS SESSEE SUBMITTED THAT REVENUE WAS SEEKING A REVIEW OF ORDE R OF THE TRIBUNAL. THIS TRIBUNAL HAD CLEARLY HELD THAT ON 4 .5 GROUNDS OF LAND, NO CONSTRUCTION WAS POSSIBLE AS PER CORPORATI ON RULES. ACCORDING TO HIM, WHEN THERE WAS A RESTRICTION IN C ONSTRUCTION OF BUILDING ON ACCOUNT OF ORDER OF AN COMPETENT AUTHOR ITY, NO VALUE COULD BE ATTACHED TO SUCH LAND. DEFINITION OF URBAN LAND GIVEN IN EXPLANATION(1) TO SEC 2(EA)(VI) OF THE ACT CLEARLY MENTIONS THAT LAND ON WHICH NO CONSTRUCTION WAS POSSIBLE, HAD TO BE EXCLUDED. 4. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW AND HEARD RIVAL CONTENTIONS. GROUNDS RAISED BY THE REVE NUE IN THE APPEAL FILED ARE REPRODUCED HEREUNDER:- 2.1. THE LD. CWT(A) HAS ERRED IN DIRECTING THE ASSE SSING OFFICER TO EXCLUDE THE VALUE OF ASSESSEES PROPERTY AT 868,POO NAMALEE HIGH ROAD FROM THE VALUE OF TAXABLE WEALTH. 2.2. THE LD. CWT(A) FAILED TO APPRECIATE THAT THIS HONBLE TRIBUNAL HAD IN WTA NO.68,69 & 70 FOR A.Y.S 96-97 TO 98-99 H ELD THAT THE LAND IN QUESTION COMES CLEARLY WITHIN THE DEFINITION OF URBAN LAND AS GIVEN IN THE STATUTE AND IN ITS OPINION IT WAS EXIGIBLE TO T AX. THE HONBLE TRIBUNAL RESTORED THE ISSUE TO THE ASSESSING OFFICE R ONLY TO ENQUIRE INTO MP.08/09 /MDS/13 MSK CONSTRUCTION 5 THE ASPECT OF ANY DEPRESSING FACTORS FOR WHICH ANY DISCOUNT WAS TO BE GIVEN. THE ISSUE OF WEALTH HAS THEREFORE BECOME FI NAL AND THE CIT(A) HAD NO JURISDICTION TO ADJUDICATE AS TO WHETHER THE VALUE OF LAND IS ASSESSABLE AS WEALTH. 2.3. IT IS SUBMITTED THAT IN THESE CIRCUMSTANCES, I T WAS BEYOND THE SCOPE OF THE CIT(A) TO HOLD THAT THE LAND IN QUESTI ON WAS TO EXCLUDE FROM THE WEALTH OF THE ASSESSEE. 2.4. WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A) ERR ED IN HOLDING THAT THE LAND UNDER THE ATTACHMENT ORDER OF THE DVAC WAS OUT SIDE THE SCOPE OF ASSETS U/S2(EA)(VI). 2.5. THE LD. CIT(A) FAILED TO APPRECIATE THAT THER E WAS ONLY A LIMITED PROHIBITION WITH REGARD TO THE LAND IN QUESTION AND UNLESS THERE WAS A PROHIBITION TO CONSTRUCTION OF BUILDING UNDER ANY R ELEVANT LAW GOVERNING SUCH CONSTRUCTION THE LAND CANNOT BE EXCLUDED FROM THE WEALTH OF THE ASSESSEE. 2.6. THE LD. CWT(A) HAS ERRED IN HOLDING THAT 4 GROUNDS OF LAND WHICH WAS RESERVED FOR OPEN SPACE BY CORPORATION WA S OUTSIDE THE SCOPE OF ASSETS UNDER SECTION 2(EA)(VI). 2.7 THE LD. CWT(A) FAILED TO APPRECIATE THAT RESER VATION FOR OPEN SPACE COMES AS A PACKAGE FOR PERMISSION TO CONSTRUC T ON A PARCEL OF LAND AND SUCH RESERVATION DOES NOT CHANGE THE URBA N CHARACTER OF THE LAND. MP.08/09 /MDS/13 MSK CONSTRUCTION 6 2.8 THE LD. CIT(A) FAILED TO APPRECIATE THAT THE AS SESSING OFFICER HAD ALLOWED A 20% REBATE ON THE VALUE OF THE LAND FOR V ARIOUS DEPRESSING FACTORS. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. IT IS CLEAR THAT IN GROUNDS NOS. 2.4 TO 2.6, REVEN UE HAD ASSAILED THE DIRECTION OF THE CWT(A) TO EXCLUDE 4 GROUND S RESERVED FOR THE OPEN SPACE FOR CORPORATION FROM THE SCOPE O F LEVY OF WEALTH TAX. SUCH GROUNDS WERE RAISED WITHOUT PREJU DICE TO ITS GROUND NOS.2.1 TO 2.3. AT 2.3, REVENUE HAS INDEED RAISED CLEARLY A GROUND ASSAILING THE DIRECTION OF CIT(A) TO EXCLUDE THE LAND FROM WEALTH OF THE ASSESSEE. THE LAND ADMITTE DLY COMPRISED 15 GROUNDS AND NOT FOR 4.5 GROUNDS. THEREFORE, W E ARE SATISFIED THAT THERE WAS NON-ADJUDICATION OF GROUND NOS. 2.2. & 2.3. RAISED BY THE REVENUE. MP.08/09 /MDS/13 MSK CONSTRUCTION 7 5. COMING TO THE MERITS, IT IS NOT DISPUTED THAT THERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE BY THE DVAC AND ATTACHMENT OF ASSETS INCLUDING THE PROPERTY IN QUES TION. NO DOUBT, ATTACHMENT OF THE PROPERTY WILL DEFINITELY DEPRESS THE VALUE OF THE PROPERTY, SINCE IT CANNOT BE SOLD. LD. CWT(A) HAS GIVEN A CLEAR FINDING THAT ATTACHMENT WHICH WAS FORMULIZED IN FE BRUARY, 1997, STOOD LIFTED BY HONBLE JURISDICTIONAL HIGH COURT B Y VIRTUE OF ORDER DATED 28.04.98. THIS ASPECT HAS BEEN MENTIONED BY THE ASSESSEE HIMSELF IN ITS LETTER DATED 27.11.09 ADDRE SSED TO THE ASSESSING OFFICER. THEREFORE, THERE IS MUCH STRENG TH IN THE ARGUMENT OF THE ASSESSEE THAT AS ON 31.03.97 & 31.0 3.98, NO MARKET VALUE CAN BE ATTRIBUTED TO THE LAND, SINCE ON THAT DATES, THE LAND WAS NOT A MARKETABLE COMMODITY AT ALL ON A CCOUNT OF THE ATTACHMENT. WE DO NOT THUS FIND ANY LACUNAE IN THE ORDER OF THE CIT(A) TO EXCLUDE THE FIFTEEN GROUNDS WHILE COMPUT ING THE NET WEALTH OF THE ASSESSEE. 6. IN THE RESULT, WE ALLOW THE MISCELLANEOUS PETIT IONS FILED BY THE REVENUE, RECALL THE ORDER DATED 23.06.2011 IN S O FAR AS IT MP.08/09 /MDS/13 MSK CONSTRUCTION 8 RELATES TO ASSESSMENT YEARS 1997-98 AND 1998-99 AND THE REINSTATED APPEALS FOR THESE YEARS ARE DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 21 ST MARCH, 2013 AT CHENNAI. SD/- SD/- (V.DURGA RAO) (ABRAHAM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED 21 ST MARCH, 2013 . K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE MP.08/09 /MDS/13 MSK CONSTRUCTION 9