Income Tax Appellate Tribunal - Mumbai
Summit Securirites Ltd Formelry Knowan ... vs Department Of Income Tax
आयकर अपीलीय अिधकरण, मंुबई यायपीठ "ड लु. टी" मंुबई । IN THE INCOME TAX APPELLATE TRIBUNAL "W.T." BENCH, MUMBAI सवर् ी जी.ई.वीरभद्र पा, अ यक्ष,एवं ी अिमत शक् ु ला, या.स. के समक्ष ।
BEFORE SHRI G.E. VEERABHADRAPPA, HON'BLE PRESIDENT AND SHRI AMIT SHUKLA, JUDICIAL MEMBER धनकर अपील सं./ W.T.A No.88/Mum/2011.
(िनधार्रण वषर् / Assessment Year: 2004-2005) DCWT, RG 8(2), Mumbai-400 Summit Securities Ltd. 020 (Formerly Known as KEC Vs. International Ltd.), CEAT Mahal, 463, Dr.A.B.Rd, Worli, Mumbai.
थायी ले खा सं . /जीआइआर सं . /PAN No. AAACS 6165 P (अपीलाथीर् /Appellant) : (प्र यथीर् / Respondent) राज व की ओर से / Revenue by : Mr. Mohit Jain िनधार्िरती की ओर से/ Assessee by : Mr. Yogesh Thar सन ु वाई की तारीख / Date of Hearing : 21 s t August, 2012 घोषणा की तारीख /Date of Pronouncement : 29 t h August, 2012 आदे श / O R D E R PER AMIT SHUKLA (J.M.) :
This appeal has been preferred by the revenue against the impugned order dated 19-9-2011, passed by the CWT(A)-17, Mumbai for the quantum of assessment passed under Section 16(3) read with section 17 of the W.T. Act, 1957 on the following grounds :-
"1. On the facts and in the circumstances of the case and in law, the Ld. CWT(A) erred in holding that the freehold land of `.4555.00 lakhs owned by the assessee is not liable to tax without appreciating that the assessee does not fulfil the conditions laid down u/s.23(ea)(i) of the Wealth Tax Act.
2. On the facts and in the circumstances of the case and in law, the Ld. CWT(A) erred in deleting the addition by directing the Assessing Officer to compute the net wealth on the basis of 80% of the insured value of the vehicles without appreciating that there is no provisions in Wealth Tax Act to adopt 80% of the insured value either in Section 2 WTA No : 88/11 2(ea)(ii) or under the exceptions to Section 2(ea)(ii) of the Wealth Tax Act, 1957."
2. The facts in brief are that the assessee has filed its return of wealth for the assessment year 2004-2005, showing net wealth of `.2,18,97,100/- on 28-10-2004. Such a return was accepted under Section 16(1). Subsequently proceedings under Section 17(1) were initiated and by issuance of a notice under Section 17. The main reasons for reopening the case was that the assessee had shown the value of freehold land in the balance sheet at `.4650.31 lakhs as against value shown in the wealth tax return at `.26.87 lakhs and value of motor cars as per the balance sheet was of `.277.43 lakhs and in the wealth tax return, it was shown at `.105.56 lakhs. In response to show cause notice, the assessee submitted that freehold land owned by the assessee company does not include any "urban land" as defined in Explanation (b) to section 2(ea) of the Wealth Tax Act, 1957. The details of land chargeable and not chargeable to wealth tax was given as under :-
Land at Kurla Mfg. Unit 4555.00 Exempted from W.T. Land at Cetex Mfg. Unit 68.44 Exempted from W.T. Land at Salasar 5.00 Chargeable under W.T. Land at Butibori 21.87 Chargeable under W.T. Total 4650.31
3. The Assessing Officer, however, held that freehold land is an 'asset' chargeable to tax within the meaning of section 2(ea)(v)of the W.T.Act. as the case of the assessee was not covered by the 3 WTA No : 88/11 exception clause mentioned in section 2(ea). Regarding valuation of motor cars by adopting 80% of the insured value, he held that in the balance sheet the value was disclosed at `.277.43 lakhs, therefore, the value adopted by the assessee for the wealth tax purpose is not correct and added the same for the purpose of taxable wealth.
4. In the first appeal, regarding first issue, the assessee submitted that the land at Kurla was being used for manufacturing of galvanised towers and similarly the land at Cetex was being used at a petrochemical division and, therefore, these lands were in the nature of the assets being land occupied by the building and the same is covered by clause 3 to sub section (i) of Section 2(ea), which provides that "where an asset is used for the purpose of any business or profession", the same is not included in the meaning of asset for the purpose of wealth tax. Further, it was submitted that the land at Kurla and Cetex cannot be regarded as 'urban land', since they are covered under the exception being "the land occupied by any building which has been constructed with the approval of appropriate authority". As required by the CWT(A), the assessee also furnished copies of maps at Kurla and Cetex showing construction of building on the said land and following necessary details were filed :-
Unit Total area Area occupied by Area occupied by constructed buildings developed land used for storage purposes Kurla 41,807 sq.mt 90% i.e. approx. 10% i.e. approx. 4,181 37,626 sq.mt sq.mt.
Cetex 51.23 acres 23.33 acres 27.90 acres 4 WTA No : 88/11 Learned CWT(A) after considering the relevant provisions of Section 2(ea), came to the conclusion that so far as the land at Kurla is concerned, the same can be treated as exempt as 90% of the area was covered by manufacturing unit, whereas in the case of the Cetex, out of 51.23 acres the assessee had constructed on the area of 23.33 acres and the balance land was lying vacant and no evidence has been shown that the said construction was approved. The relevant finding of the CWT(A) is reproduced herein below :-
"4.5 Clause (3), to section 2(ea)(i), very clearly states that any house which the assessee may occupy for the purposes of any business or profession, carried on by him, is to be excluded from the definition of "asset". In other words, any business asset, being a "house" would not be taxable. Likewise, "urban land" would not include land occupied by any building which has been constructed with the approval of the appropriate authority. Thus, land being utilized by the assessee for running a manufacturing unit would come under the exception of clause (3), to section 2(ea)(i) and also to the exceptions of urban land as given in clause (b), to Explanation 1 of section 2(ea). Now, in the instant case, the land at Kurla is clearly exempt as not only is it covered to the extent of 90% by a manufacturing unit, and hence exempt under clause (3), to section 2(ea)(i), but also covered by the exception to urban land, in as much as, the vacant 10% land can be said to be appurtenant to the building. Further the appellant has also furnished proof in the shape of an approved map by the appropriate authority, to show that the building has been constructed with the approval of the appropriate authority. Hence, this land would be outside the purview of asset as defined in section 2(ea). However, with regard to the Cetex land, it is seen that out of the 51.23 acres, the appellant has submitted that, only 23.33 acres is constructed land, and the balance land is lying vacant. No evidence to show that the said construction is approved, has been filed. In the circumstances, I am unable to treat the Cetex land as being exempt from the purview of urban land. The same is, therefore, held to be taxable within the meaning of Section 2(ea). In the circumstances, the assessee would get a relief of `.4555 lacs from the taxable wealth. This ground of appeal is, therefore, partly allowed."
5. Regarding second issue of valuation of motor cars, learned CWT(A) relying upon the decision of the ITAT in the case of M/s Samarth Knitters P. Ltd., 60 ITD 657 (Mumbai), deleted the addition.
5 WTA No : 88/11
6. Learned Department Representative relied upon the reasoning given by the Assessing Officer. On the other hand, learned counsel for the assessee relied upon the findings of the CWT(A) and submitted that already the CWT(A) has included the land of Cetex under Wealth Tax and land at Kurla was clearly within the exception provided under the Act.
7. After carefully considering the rival submissions and also finding given by the CWT(A) as well as the Assessing Officer, we find that so far as the land at Cetex, learned Commissioner has already included the land within the meaning of asset chargeable to wealth tax. So far as the land at Kurla, the CWT(A), after verifying the records has given a finding of fact that the said land was dominantly occupied i.e. 90% by constructed building for the purpose of manufacturing unit used for assessee's business purpose. The same falls within the exception clause of clause 3 of sub-section (1) of Section 2(ea). Further, it is also covered by the exception given to the definition of "urban land" in clause (b) to Explanation 1 of Section 2(ea), which is clearly evidenced from the approved map by the appropriate authority. On these findings of facts, we do not find any reason to deviate from the findings given by the CWT(A) and accordingly the same is confirmed. In the result, ground No.1 raised by the revenue stands dismissed.
8. Now, coming to the second issue regarding valuation of motor cars at 80% of the insured value, we find that the same issue stands 6 WTA No : 88/11 covered by the decision of the ITAT Mumbai Bench in the case of M/s Samarth Knitters P. Ltd. (supra). Thus, the findings of the CWT(A) on this score also stands confirmed. In the result, ground No.2 raised by the revenue stands dismissed.
9. In the result, the appeal of the revenue is dismissed.
पिरणामतः राज व की की अपील खािरज की जाती है ।
Order pronounced in the open court on 29th August, 2012 .
ु े यायालय म िदनांकः 29 August, 2012 को की
आदे श की धोषणा खल th
गई ।
Sd/- Sd/-
( जी.ई.वीरभद्र पा ) ( अिमत शक्
ु ला )
( G.E. VEERABHADRAPPA) (AMIT SHUKLA)
अ यक्ष / PRESIDENT याियक सद य/JUDICIAL MEMBER
मंब
ु ई Mumbai; िदनांक Dated 29th / August /2012
प्र.कु.िम/pkm.िन.स./PS
आदे श की प्रितिलिप अग्रेिषत/Copy of the Order forwarded to :
1. अपीलाथीर् / The Appellant
2. प्र यथीर् / The Respondent.
3. आयकर आयक्त ु (अपील) / The CIT(A)-
4. आयकर आयक्त ु / CIT
5. िवभागीय प्रितिनिध, आयकर अपीलीय अिधकरण, मंब ु ई/ DR, ITAT, Mumbai
6. गाडर् फाईल / Guard file.
स यािपत प्रित //True Copy// आदे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मंब ु ई / ITAT, Mumbai