Income Tax Appellate Tribunal - Kolkata
Mahendraj..Javeri, Kolkata vs Department Of Income Tax on 31 December, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH "B" KOLKATA Before Shri Mahavir Singh, Judicial Member and Shri Waseem Ahmed, Accountant Member WTA No.35-38/Kol/2013 Assessment Years :2005-06 to 2008-09 Shova Properties Pvt. V/s. Commissioner of Income Ltd. P-214, Lake Town, Tax, Kolkata-IV, 6 t h Block A, Kolkata - 700 Floor, P-7, Chowringhee 089 Square, Kolkata-700 069 [P AN No. AAKCS6774 J] अपीलाथ /Appellant .. यथ /Respondent आवेदक क ओर से/By Assessee Shri Miraj D Shah, AR राज व क ओर से/By Respondent None सन ु वाई क तार ख/Date of Hearing 11-12-2015 घोषणा क तार ख/Date of Pronouncement 31-12-2015 आदे श /O R D E R PER BENCH:-
These four appeals filed single assessee against the common order passed u/s 25(2) of the Wealth Tax Act, 1957 (hereinafter referred to as 'the Act') by Commissioner of Income Tax-IV, Kolkata vide dated 28.03.2013. Assessments were framed by Wealth Tax Officer Ward-11(4), Kolkata u/s 16(3)/17 of the Act vide his orders dated 29.12.2010 for assessment years 2005-06 to 2008-09 respectively.
2. At the time of hearing none appeared on behalf of Revenue and DR filed the adjournment application for 16 cases. The bulk adjournment in 16 WTA No.35-38/Kol/2013 A.Ys.05-06 to 08-09 Shova Properties Pvt. Ltd. v. CIT -IV, Kol. Page 2 cases is not accepted. So we decided to hear these cases where we find that the hearing is possible without appearance of Ld. DR on the part of Revenue.
However, in the present cases, we find that these are old appeals and has been fixed for hearing as many as eight times (including today's hearing). Hence, we rejected the adjournment application and proceeded for hearing Ld. AR, Shri Miraj D Shah appearing on behalf of assessee.
3. Since the issues raised by assessee in these appeals relate to common issue, therefore, we are hearing them together for the sake of convenience and disposing by passing a consolidated order. We take a lead case in assessee's appeal in WTA No. 35/Kol/2013 for the AY 2005-06 which is reproduced below:-
"1. FOR THAT the Order of Commissioner of Income Tax, Kolkata-IV passed u/s/. 25(2) of the Wealth Tax Act is unwarranted and bad in law and accordingly, liable to be quashed in appellate forum.
2. FOR THAT the Commissioner cannot sit over in appeal on the issue already adjudicated by the Assessing Officer while framing his Order of Assessment u/s/.. 16(3)/17 of the Wealth Tax Act.
3. FOR THAT the jurisdiction u/s 25(2) cannot be assumed on mere change in opinion.
4. FOR THAT in any event, the debt of Rs.71,00,000/- was duly reflected in audited Books of Accounts and the assessee is eligible for deduction of the same. From a close look of the audited accounts, it would be apparent that the debt amounting to Rs.71,00,000/- was directly related to construction and acquisition of house property.
5. FOR THAT an order which is not erroneous cannot be revised u/s. 25(2) of the Wealth Tax Act.
6. FOR THAT a legally framed assessment cannot be revised merely because another view is possible or the Assessing Officer had accepted the assessee's return of wealth."
4. The common issue raised in all the grounds of appeal is that Ld. CIT erred in not considering the debt for working out the net wealth of assessee. WTA No.35-38/Kol/2013 A.Ys.05-06 to 08-09 Shova Properties Pvt. Ltd. v. CIT -IV, Kol. Page 3 The brief facts of the case are that assessee is a Private Limited Company and engaged in trading business of wood. During the course of assessment proceeding AY 2007-08, Assessing Officer found that assessee has declared in its balance-sheet for the year ending 31st March 2003, land and building for a value of Rs.71,66,775/- (cost of land Rs.19,96,475/- and cost of building of Rs.51,70,300/-). The land & building was located at P-214, Lake Town, Block- A, Kolkata-700 089. AO sought explanation from the assessee for not showing such land & building in the wealth tax returns, the assessee explained that aforesaid land & building has been used exclusively by the Director of the company for residential purposes. Therefore the land & building was used for the commercial purposes, hence it is out of the purview of the wealth tax. However, the AO found that land & building has not been used for the purpose of business of assessee. Besides the depreciation on this land & building was also not allowed to assessee under the IT Act. On the basis of above, AO opined that there is liability under the Wealth Tax Act upon the assessee which has escaped from WT Act. Accordingly, AO issued notice u/s. 17 of the Act. In response thereto, assessee submitted its return of wealth tax. During the assessment proceedings, AO found that assessee took a debt on land & building for an amount of ₹71 lacs. So the net wealth of assessee after deducting the loan taken from the value of said land & building becomes zero. Therefore, assessment was framed by WTO at ₹ nil.
5. However, Ld. CIT found the balance-sheet of the assessee that there is no loan reflecting on the land & building. Accordingly, the deduction of loan allowed by AO has resulted under-statement of net wealth for all the four assessment years. Therefore, Ld. CIT opined that assessment made by AO is erroneous and prejudicial to the interest of Revenue and hence issued notice for the same upon assessee. Before Ld. CIT, assessee submitted that issue of debt on the land & building has been duly considered in assessment proceedings by AO therefore, before the same cannot be called erroneous by Ld. CIT. The Ld. AR also pleaded before Ld. CIT that land & building in WTA No.35-38/Kol/2013 A.Ys.05-06 to 08-09 Shova Properties Pvt. Ltd. v. CIT -IV, Kol. Page 4 question is outside the purview of wealth Tax Act. However, Ld. CIT has disregarded the claim of assessee by stating that assessee's submission is silent about the debt which was allowed in the due course of assessment proceeding made by AO. Therefore, Ld. CIT held that the debt of ₹ 71 lakh ought to have been disallowed and directed the AO to look into the issue afresh and pass necessary order according to law.
6. Aggrieved by this order of Ld. CIT assessee preferred second appeal before us.
7. We have heard Ld. AR and perused the materials available on record. Ld. AR submitted the paper book which is running pages 1 to 8 and stated that issue of debt was duly considered by AO. So, the order passed by AO is not erroneous and prejudicial to the Revenue. Further, the Ld. AR drew our attention on pages 4 to 7, where the balance sheet of assessee was filed, showing a share capital was at ₹ 1 lac. Ld. AR further submitted the detailed of loan taken by assessee for the purpose of land & building which is reproduced below :-
Working on liabilities:-
Sl.No. Particulars Amount Amount
1 Share capital
2 Share application money 47,00,000
3 Unsecured loan:
4 From shareholders 6,33,955
5 From companies 24,840
6 From Prakash Ply Centre 13,00,000 19,58,795
7 Current Liabilities
6 Advance against flats 7,24,250
7 Total 73,83,045
WTA No.35-38/Kol/2013 A.Ys.05-06 to 08-09
Shova Properties Pvt. Ltd. v. CIT -IV, Kol. Page 5
From the aforesaid discussion, we find that AO framed the wealth tax assessment at ₹ nil value after taking into consideration of loan taken for the said land & building of assessee. However, Ld. CIT opined that the loan is not reflected in the balance-sheet of assessee. So the order of AO is erroneous and prejudicial to the interest of Revenue. However, we find force from the submission made before us including the audited balance-sheet of company by the assessee, where the loan declared by assessee has been duly reflected in its balance-sheet. Hence, there is no ambiguity from the financial statement of assessee regarding the loan value of ₹ 71 lacs. The Ld. CIT has misunderstood from the balance-sheet filed by assessee that there is no loan liability on the said land & building of assessee. In view of above, we reverse the order of Ld. CIT and issue raised by assessee in this appeal is allowed accordingly.
Now coming to the other appeal of the assessee on the same grounds in WTA No. 36/Kol/2013, 37/Kol/2013, 38/Kol/2013.
8. Taking a consistent view in assessee's appeal in WTA No. 35/Kol/2013 and facts being similar in remaining appeals of assessee, we allow all the appeals of assessee.
9. In the result, assessee's appeals are allowed.
Order pronounced in the open court 31/12/2015 Sd/- Sd/-
(Mahavir Singh) (Waseem Ahmed) (Judicial Member) (Accountant Member) Kolkata, *Dkp "दनांकः- 31/12/2015 कोलकाता । आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. आवेदक/Appellant-Shova Properties Pvt. Ltd.,P-214, Lake Town, Block-A, Kol-89 WTA No.35-38/Kol/2013 A.Ys.05-06 to 08-09 Shova Properties Pvt. Ltd. v. CIT -IV, Kol. Page 6
2. राज व/Revenue-CIT, Kol-IV, 6th Fl, P7, Chowringhee Square, Kolkata-69
3. संब.ं धत आयकर आय0 ु त / Concerned CIT Kolkata
4. आयकर आय0 ु त- अपील / CIT (A) Kolkata
5. 2वभागीय 5त5न.ध, आयकर अपील य अ.धकरण, कोलकाता / DR, ITAT, Kolkata
6. गाड9 फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपील य अ.धकरण, कोलकाता ।