Income Tax Appellate Tribunal - Chennai
Shri A.Vijayakant, Chennai vs Acwt, Chennai on 5 August, 2022
आयकर अपीलीय अिधकरण 'बी' ायपीठ चे ई म।
IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, CHENNAI माननीय +ी महावीर िसंह, उपा12 एवं माननीय +ी मनोज कुमार अ7वाल ,ले खा सद: के सम2।
BEFORE HON'BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM Sr. Appeal Numbers Assessment Appellant Respondent No Years 1 WTA No.21/Chny/2010 2001-02 Shri A. Vijaya Kant, ACIT 2 WTA No.22/Chny/2010 2002-03 No.53, 54, Central Circle-I(2), 3 WTA No.23/Chny/2010 2003-04 Kannammal Street, Chennai.
4. WTA No.24/Chny/2010 2004-05 Kannabiran Colony,
5. WTA No.25/Chny/2010 2005-06 Saligramam,
6. WTA No.26/Chny/2010 2006-07 Chennai - 600 093.
7. WTA No.27/Chny/2010 2007-08 [P AN: ABRPV-6479-N] अपीलाथ की ओरसे/ Assessee by : Shri T. Vasudevan (Advocate ) - Ld. AR थ की ओरसे /Revenue by : Shri Karthick Ranganathan (Senior Standing Counsel)-Ld. DR सुनवाई की तारीख/Date of Hearing : 19-05-2022 घोषणा की तारीख /Date of Pronouncement : 05-08-2022 आदे श / O R D E R Manoj Kumar Aggarwal (Accountant Member)
1. Aforesaid Wealth Tax appeals by assessee for Assessment Years (AYs) 2001-02 to 2007-08 arises out of separate assessment orders framed under erstwhile Wealth Tax Act, 1957. The impugned order is common order for AYs 2001-02 to 2005-06 which is passed by learned Commissioner of Wealth Tax (Appeals)-I, Chennai [CWT(A)] on 10.05.2010. The appellate order is common order for AYs 2006-07 & 2007-08 which is passed by same authority on same day. The issues are WTA Nos.21 to 27/Chny/2010 -2- substantially the same in all the years. First, we take up appeal for AY 2001-02. The assessee has filed concise grounds of appeal which read as under: -
1. The order of the Learned Commissioner of Wealth Tax (Appeals) is unjust and contrary to law and facts.
2. For that the Learned Commissioner of Wealth Tax (Appeals) erred in confirming the addition of Rs.1,39,67,630/- to the wealth of the appellant without appreciating that the said property was used for the business of the appellant and is not assessable to wealth tax.
3. Without prejudice to ground No.2, the Learned Commissioner of Wealth Tax (Appeals) failed to appreciate the fact that the appellant owns only 1/5th Share in property at Natesan Nagar and only the said share ought to have been brought to wealth tax.
4. Without prejudice to ground No.2, the Learned Commissioner of Wealth Tax (Appeals) erred in not valuing the said property as per Schedule III of the Wealth Tax Act.
5. Without prejudice to ground No.2, the Learned Commissioner of Wealth Tax (Appeals) ought to have obtained remand report from the Assessing Officer before disallowing the claim of the appellant in respect of property at Natesan Nagar.
6. For that the Learned Commissioner of Wealth Tax (Appeals) erred in disallowing the debts owned of Rs.1,47,58,175/- in the wealth tax computation.
7. For that the Learned Commissioner of Wealth Tax (Appeals) has erred in indirectly confirming the addition of interest u/s 17B of the Wealth Tax Act, 1857.
2. The Ld. AR advanced arguments supporting the case of the assessee and drew attention to the documents as placed on record. The Ld. Sr. Standing Counsel appearing for revenue controverted the arguments of Ld. AR and pleaded for dismissal of appeals. Having heard rival submissions and after careful consideration of relevant material on record, our adjudication would be as under. As is evident, three issues fall for our consideration i.e., (i) Property at Natesan Nagar ; (ii) deduction of debts owed by the assessee ; (iii) computation of interest. Assessment Proceedings 3.1 The assessee being resident individual is stated to be engaged as a film artist. The assessee was subjected to a search action u/s. 132 of the Act on 23.01.2007. The assessee did not file any wealth tax returns WTA Nos.21 to 27/Chny/2010 -3- earlier despite having taxable wealth. The assessee filed return of net wealth on 05.02.2007 declaring taxable wealth of Rs.41.60 Lacs which is extracted in para-5 of the assessment order. However, the assessee revised the return on 21.02.2007 and reduced the net wealth to Nil. The same was due to the fact that the assessee claimed debt owed for Rs.147.58 Lacs as under: -
No. Particulars Amount (Rs.)
1. Kotak Mahindra Finance 8,99,138/-
2. Cheranadu Movie Creation Pvt. Ltd. 11,28,869/-
3. Raj Films International 5,00,000/-
4. Captain Cine Creations 40,00,000/-
5. G.J.Cinema 25,00,000/-
6. Rowther Films 40,05,321/-
7. Tamil Annai Creations 17,24,847/-
Total 1,47,58,175/-
In the wealth tax returns, the assessee reflected land No.53 at Natesan Nagar for Rs.15.42 Lacs.
3.2 During the course of assessment proceedings, Hon'ble High Court of Madras restrained Ld. AO from proceedings with the assessment till disposal of assessee's writ petition. The petition was finally disposed-off on 24.03.2009. The directions given by Hon'ble Court were duly complied with by Ld. AO and various opportunities were given to the assessee to obtain copies of seized material as required by the assessee. However, despite being provided with sufficient opportunities, the assessee chose not the avail the same. In the above background, Ld. AO proceeded with framing of the assessment. 3.3 The assessee could not file any documentary evidences to support the claim of debts owed for Rs.147.58 Lacs. Accordingly, the deduction of the same was denied to the assessee except deduction of vehicle loan.
WTA Nos.21 to 27/Chny/2010 -4- 3.4 The value of Land at Natesan Nagar was adopted as Rs.204.50 Lacs which were the values admitted by the assessee before Election Commission of India for AY 2006-07. Finally, wealth tax demand of Rs.6.38 Lacs was raised against the assessee.
Appellate Proceedings and our adjudication 4.1 The Ld. CIT(A) noted that the assessee claimed long term capital loss of Rs.32.61 Lacs on sale of Land at Natesan Nagar. The land was sold for Rs.204.50 Lacs during AY 2006-07. This property was in the name of the assessee and four other joint names. In the sworn statement recorded on 05.02.2007, the assessee admitted that the property was his acquisition only and the other co-owners were former employees. To avoid the provisions of Land Ceiling Act, the land was purchased in joint names. Accordingly, entire loss was claimed by the assessee in Income Tax Return. However, in the wealth tax return, the assessee returned the value as Rs.15.42 Lacs which was based on cost of acquisition in December, 1988 and cost of improvement in 1988-89 & 1989-90. The value of other co-owners was not included in the value of the asset.
4.2 The assessee submitted that he was the owner only to the extent of 1/5th. Further, the Land was with building which was used as staff quarters and therefore not liable for wealth tax. In support, copy of tax receipt was produced. The assessee also assailed the valuation made by Ld. AO. The assessee submitted that the value may be computed as per Schedule III of the Wealth Tax Act and 1/5th of the same was to be assessed in the hands of the assessee.
4.3 However, Ld. CIT(A), considering the factual matrix, held that the assessee alone was the owner of the property. Proceeding further, the WTA Nos.21 to 27/Chny/2010 -5- property was shown as Land only in wealth tax returns. In Income tax returns also, capital gains were computed on sale of land only. The plea that the asset was building was taken up for the first time during appellate proceedings. The assessee could not show when the building was constructed. The claims made by the assessee were not supported by any evidence. Therefore, this claim could not be accepted. 4.4 Regarding valuation, Rule 20 of Schedule III mandate Ld. AO to value the land at price which it could fetch in open market on valuation date. Since, actual sale value was available i.e., Rs,204.50 Lacs, there was no merit that the valuation should have been referred to valuation officer. Finally, Ld. AO was directed to value the building in 2005-06 at Rs.204.50 Lacs whereas for AYs 2001-02 to 2004-05, Ld. AO was directed to consider year-on-year appreciation of 10%. Aggrieved, the assessee is in further appeal before us.
4.5 From the factual matrix, it emerges that though the property was held in joint names, however, for all practical purposes, the assessee was the sole owner of the property. All the other joint owners were former employee having no source of income. In fact, the assessee himself claimed Long Term Capital Loss on entire property while filing its Income Tax Returns. The same was also affirmed by the assessee in sworn statement which was never retracted. Even before constitutional authority, the assessee was declared to be the sole owner of the land. All these circumstantial evidences would show that the assessee was the sole owner of the land and other co-owners were namesake owners to avoid the provisions of Land Ceiling Act. Therefore, we find no infirmity in the impugned order on this issue.
WTA Nos.21 to 27/Chny/2010 -6- 4.6 We also find that the plea that the asset is not a land but building is also without any cogent evidence on record. Except for mere submission, there is nothing on record which would suggest that the assessee constructed building on this land. This plea was raised for the first time during appellate proceedings. However, the submissions were not supported by any material evidence. No plausible material has been produced before us also to substantiate this fact. Therefore, this plea of the assessee has also been rightly rejected by Ld. CIT(A). 4.7 So far as the valuation of land is concerned, the extant rule required the assessee to value the land on valuation rate which the property would fetch if sold in the open market. The Ld. CIT(A) has directed Ld. AO to considered year-on-year appreciation of 10%. We are of the considered opinion that considering the given factual matrix, this rate is on the lower side. Therefore, we direct Ld. AO to directed to adopt appreciation rate of 20% on year-on-year basis and recompute the value of the land. This ground stand partly allowed from AYs 2001-02 to 2004- 05 whereas this ground stand dismissed for AY 2005-06. Debt Owed 5.1 The Ld. CIT(A) upheld denial of deduction of debt-owed by observing that the assessee could not produce any evidence to substantiate that the same were in respect of assets as included in taxable wealth. Aggrieved, the assessee is in further appeal before us. 5.2 We find that the onus to prove the nexus of liabilities with the taxable wealth could not be discharged by the assessee. No new material has been placed before us to establish this nexus. Therefore, no relief could be granted to the assessee on this score. The grounds stand dismissed for all the years.
WTA Nos.21 to 27/Chny/2010 -7-
6. So far as the computation of interest is concerned, it would be suffice to direct Ld. AO to compute correct interest in accordance with law. This ground stand allowed for statistical purposes for all the years. Conclusion
7. All the appeals stand partly allowed in terms of our above order.
Order pronounced on 05th August, 2022.
Sd/- Sd/-
(MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL)
उपा12 /VICE PRESIDENT लेखासद: / ACCOUNTANT MEMBER
चे$ई / Chennai; िदनां क / Dated : 05-08-2022
EDN/-
आदे श की Sितिलिप अ 7ेिषत/Copy of the Order forwarded to :
1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आयु (अपील)/CIT(A)
4. आयकर आयु /CIT 5. िवभागीय ितिनिध/DR 6. गाड फाईल/GF