Income Tax Appellate Tribunal - Mumbai
Dbs Financial Services Pvt. Ltd., ... vs Assessee on 24 July, 2013
आयकर अपीलीय अिधकरण, धनकर" खंडपीठ मुंबई
अिधकरण "धनकर
INCOME TAX APPELLATE TRIBUNAL,MUMBAI - 'WT' BENCH.
सव[ौी आर.
आर.के.गुƯा ,Ûयाियक
Ûयाियक सदःय/
सदःय एवं ौी राजेÛि,ले
ि लेखा सदःय
Before S/Sh.R.K.Gupta, Judicial Member & Rajendra,Accountant Member
धनकर
धनकर अपील सं./WTA No. 164 &165/Mum/2004,िनधा[रण वष[/Assessment Year-1997-98 & 1998-99
DBS Financial Services P Ltd. DCWT
213 Raheja Chambers, Circle 3(5),Mumbai
Nariman Point,Mumbai -400020
PAN:AAACD5409D
(अपीलाथȸ /Appellant) (ू×यथȸ / Respondent)
अपीलाथȸ ओर से / Appellant by : Mr. Niraj Seth/Shri R.C. Jain
ू×यथȸ कȧ ओर से/Respondent by : Shri Abhijit Patankar (DR)
सुनवाई कȧ तारȣख / Date of Hearing : 24-07-2013
घोषणा कȧ तारȣख / Date of Pronouncement : 07-08-2013
Per Rajendra, A.M.
Challenging the orders of the CWT(A)-XXVIII,Mumbai,assessee has filed following grounds of Appeal for the AY.1997-98 and AY.1998-99:
WTA No.164/Mum/2004 :AY-1997-98
(a)The learned Commissioner of Wealth-tax (Appeals) erred in law in upholding the action of the Assessing Officer in bringing to tax Delhi and Bangalore properties in computing the net wealth of the appellant by including the values of the Delhi & Bangalore properties.
(b)The learned Commissioner of Wealth-tax (Appeals) erred in law in upholding the finding of the Assessing Officer that since the income from the aforesaid properties has been assessed under the head 'Income from house property' in the income tax proceedings, the said properties cannot be said to have been used for the purpose of business and hence are taxable for wealth tax purposes. The appellant submits that since both the properties are used for the purpose of the business, the same are exempt under section 2(ea)(i)(3) of the Act.
2. (a)The learned Commissioner of Wealth-tax (Appeals) erred in law in the upholding the action of the Assessing Officer in bringing to tax the value of the property at Mumbai known as DBS House used by the appellant for the purpose of its business of running a business center.
(b)The learned Commissioner of Wealth-tax (Appeals) erred in law in upholding the finding of the Assessing Officer that since the income from the aforesaid property has been assessed under the head 'Income from house property' in the income tax proceedings, the said properties cannot be said to have been used for the purpose of business and hence are taxable for wealth tax purposes. The appellant submits that since the said property is used for running a business center which is for the purpose of its business, and accordingly the same is exempt under section 2(ea)(i)(3) of the Act.
3.The learned Commissioner of Wealth-tax (Appeals) erred in law in upholding the action of the Assessing Officer in levying interest under section 17B of the Act.
4.The appellant submits that the Assessing Officer be directed:
(i)to exclude Delhi and Bangalore properties from the computation of net wealth of the appellant;
(ii)to exclude the portion of property at Mumbai-DBS House which is used for the running of the business Center from the computation of net wealth of the appellant;
(iii)To delete/rework interest levied under section 17B of the Act amounting to Rs. 61,996/- after giving necessary effect to the appeal order;and to modify the assessment as per the provision of law.
2 WTA No. 164 & 165 Mum 2004 DBS Financial Services P Ltd.
5.Each of the above grounds of appeal are independent and without prejudice to each other.
6.The appellant craves liberty to add, to alter and/or amend the grounds of appeal as and when given.
WTA No.165/Mum/2004 :AY-1998-99 The learned Commissioner of Wealth-tax (Appeals) erred in holding that the proceedings that were initiated by the Assessing Officer to reassess the appellant's wealth were justified and valid. The learned Commissioner of Wealth-tax (Appeals) ought to have held that the jurisdictional conditions which were required to be fulfilled before proceedings could be validly initiated were not complied with and accordingly the reassessment proceedings were bad in law;
2. (a)The learned Commissioner of Wealth-tax (Appeals) erred in law in the upholding the action of the Assessing Officer in bringing to tax Delhi and Bangalore properties in computing the net wealth of the appellant by including the values of the Delhi & Bangalore properties.
(b)The learned Commissioner of Wealth-tax (Appeals) erred in law in upholding the finding of the Assessing Officer that since the income from the aforesaid properties have been assessed under the head 'Income from house property' in the income tax proceedings, the said properties cannot be said to have been used for the purpose of business and hence are taxable for wealth tax purpose. The appellant submits that since both the properties are used for the purpose of the business and accordingly the same are exempt under section 2(ea)(i)(3) of the Act.
3(a)The learned Commissioner of Wealth-tax (Appeals) erred in law in upholding the action of the Assessing Officer in bringing to tax the value of the property at Mumbai known as DBS House used by the appellant for the purpose of its business of running a business center.
(b)The learned Commissioner of Wealth-tax (Appeals) erred in law in upholding the finding of the Assessing Officer that since the income from the aforesaid properties have been assessed under the head 'Income from house property' in the income tax proceedings, the said properties cannot be said to have been used for the purpose of business and hence are taxable for wealth tax purpose. The appellant submits that since the said property is used for running a business center which is for the purpose of its business, and accordingly the same is exempt under section 2(ea)(i)(3) of the Act.
4.The learned Commissioner of Wealth-tax (Appeals) erred in law in upholding the action of the Assessing Officer in levying interest under section 17B of the Act.
5.The appellant submits that the Assessing Officer be directed
(i)to exclude Delhi and Bangalore properties from the computation of net wealth of the appellant;
(ii)to exclude the portion of property at Mumbai-DBS House which is used for the running of the business Center from the computation of net wealth of the appellant;
(iii)To delete/rework interest levied under section 1 7B of the Act amounting to Rs. 5,13,587/- after giving necessary effect to the appeal order;and to modify the assessment as per the provision of law.
6.Each of the above grounds of appeal are independent and without prejudice to each other.
7.The appellant craves liberty to add, to alter and/or amend the grounds of appeal as and when given.
Details of dates of filing of returns,wealth returned,dates of assessment,assessed wealth, dates of orders of the CWT(A)can be summarised as under :
Dt. of filing of Returned Date of assessment Assessed Dt. of orders Return wealth (Rs.) wealth(Rs.) of CWT(A) 1997-98 29.04.1998 3,82,79,600 24.01.2000 6,34,96,627 19.02.2004 1998-99 06.02.2001 4,07,89,100 28.03.2002 20,85,11,550 26.04.2002 WTA No.164/Mum/2004 :AY-1997-98
2.First ground of appeal filed by the assessee pertains to upholding the action of the Assessing Officer (AO) in bringing to tax Delhi and Bangalore properties in computing the net wealth of the assessee. AO has dealt with this issue on pages 2 and 3 of his order at Para 3.After considering the submissions of the assessee,he held that properties in question fell within the definition of assets as per the provisions of section 2(ea) of the Act.Referring to the amendment 3 WTA No. 164 & 165 Mum 2004 DBS Financial Services P Ltd.
inserted by Finance Act,1996 (w.e.f. 01.04.1997)he held that the properties let out by the assessee would form part of its total wealth, that the values of these properties were to be included in the total wealth of the assessee. He computed the value of the immovable properties at Rs. 6.91 Crores,out of the total wealth of Rs. 6.43 Crores for the year under consideration. 2.1.Assessee preferred an appeal before the First Appellate Authority(FAA).After considering the submissions of the assessee and the assessment order, he held that he had decided the Income Tax appeal for the AY 1993-94 in respect of aforesaid properties,that in his order,he had held that properties in question were taxable under the head 'Income from House Property',that the appellant could not be said to have used those properties for the purposes of its business. Accordingly,he upheld the decision of the AO in taxing the value of the properties for wealth tax purposes.
2.2.Before us, Authorised Representative(AR) submitted that assessee was using properties at Delhi and Bangalore for the purpose of its business for which it had received compensation, that the Delhi property was obtained under the sub-licence, that the Bangalore property was owned by the assessee to the extent of 1/3 of the property,that aforesaid properties were used for the purpose of its business,that same were not included in computing its net wealth,that the assessee was a mere licensee in respect of Delhi property and it did not belong to the assessee-company, that the assessee was not the owner of the said property and hence same was not taxable in its hand, that the properties were exempt as per the provisions of section 2(ea)(i)(3) of the Act.He relied upon the judgment of the Hon'ble High Court of Bombay delivered in the case of Normandy Developments Private Limited.(ITANo.2431of 2009).Departmental Representative (DR) relied upon the orders of the AO and the FAA.He submitted that issue was decided against the assessee by the Tribunal in earlier year.
2.3.We have heard the rival submissions and perused the material before us.We find the order of the Hon'ble jurisdictional High Court in the matter of Normandy Developments Private Limited. (supra) the issue had been decided as under:
"3.Section 27 (iiib) provides that for the purposes of sections 22 to 26, a person who acquires any rights (excluding any rights by way of a lease from month to month or for a period not exceeding one year) in or with respect to any building or part thereof, by virtue of any such transaction as is referred to in clause (f) of Section 269UA, shall be deemed to be the owner of that building or part thereof Clause (f) of for a term of not less than twelve years.The contention of the revenue is that the lease that is referred to in Section 27(iiib) must be for a term of not less than twelve years as described in Section 269UA.
4.The submission cannot be accepted.Under Clause (iiib) of Section 27 a person who acquires any rights in or with respect to any building or part thereof,by virtue of a transaction as is referred to in clause (f)of Section 269UA is deemed to be the owner of a building or part thereof. However,the bracketed portion of clause (iiib) excludes certain transactions; these being the acquisition of rights under a lease which operates from month to month or is for period not exceeding one year. Hence, where the acquisition of rights under a lease is otherwise than by way of a lease from month to month or is for a period in excess of one year, the exclusion will not apply.If the contention of the revenue were to be accepted, the bracketed portion of clause (iiib) of section 27 would cease to have any significance In the present case, the lease was admittedly for a period of ten years and would, therefore, not fall within the exception carved out by clause (iiib) of Section 27.
In these circumstances, we do not find any error in the order of the Tribunal. The Appeal does not give rise to any substantial question of law and shall dismissed." 2.4.We are of the opinion that in the interest of justice matter has to be looked in to by the FAA afresh after considering the judgment of Normandy Developments Private Limited.(supra),as the matter has direct bearing on the facts of the case.In the present matter issue is of sub lease for a period more than one year.FAA should afford reasonable opportunity of hearing to the assessee,while re-adjudicating the matter.
4 WTA No. 164 & 165 Mum 2004 DBS Financial Services P Ltd.
Ground of appeal no.1 is decided in favour of the assessee ,in part,.
3.Next ground of appeal about the value of property known as DBS House.During the income- tax assessment proceedings AO found that the DBS House at Mumbai was being used by the assessee for the purposes of running a business centre. The portion of DBS House which was rented had already been included in the computation of net wealth and there was no dispute pertaining to that protion.AO and the assessee had difference of opinion with regard to that portion of DBS House which had been used for the purposes of running a business centre. assessee submitted that was is running a business centre in the aforesaid premises which was accordingly used for the purposes of its business, that as per the definition of the term "assets" in section 2(ea)(i)(3), the aforesaid property was not includible in computing net wealth of the appellant, that in AY 1996/97, CIT(A) had held that income is assessable as business income.AO held that in the later AYs.FAA had held that the income from the property in question should be assessee u/s.22 of the Act,that exemption provided u/s. 2(ea)(i)(3) was not available to it.
3.1.Assessee preferred an appeal before the FAA.After considering the submissions of the assessee he held that while deciding the appeal under the Income-tax Act he had held that income from the DBS House had to be taxed under the head income from house property,that the assessee could not be said to have been used the property for the business purposes.Finally,he upheld the action of the in taxing the value of the said property for wealth tax purposes.
3.2.AR submitted that property was being used for purposes of business,that for the AY.1996-97 FAA had treated the income from DBS house under the head income from business,that provisions of section 2(ea)(i)(3)were applicable in the case under consideration, that FAA had followed the order passed under income-tax Act,that he did not consider the relevant provisions of the Act.DR supported the orders of the FAA.
3.3.We have heard the rival submissions and perused the material on record.We find that FAA had not given any finding with regard to applicability of the provisions of section2(ea)(i)(3).In our opinion a reasoned speaking order has not been passed.Therefore,in the interest of justice matter is remitted back to the file of the FAA for fresh hearing.He should decide the matter afresh after hearing the assessee.If the claim made by the assessee is found as per the provisions of law,same should be allowed.
Ground of appeal no.2 is partly decided in favour of the assessee.
4.Last ground of appeal is with regard to levy of interest under section 17B amounting to Rs.61, 996/-.The appellant filed its return of net wealth returning net wealth of Rs.3,82,79,620/- and as per the said return, the wealth-tax payable was Rs.3,67,796/-.AO made certain additions and levied interest under section 17B of the Act. Additions made by the AO pertained to value of Delhi and Bangalore properties and the value of DBS House Mumbai.As both the issues have been remanded back to the file of the FAA,so the issue of levy of interest is academic in nature.It is allowed in faovour of the assessee for statistical purposes.
As a result,appeal filed by the assessee stands partly allowed WTA No.165/Mum/2004 :AY-1998-99 Grounds of appeal filed by the assessee for the AY under consideration are identical to the ground for the last AY.Following the order for the AY.1997-98 we restore back the matter to the file of the FAA for all the three effective grounds of appeal.
5 WTA No. 164 & 165 Mum 2004 DBS Financial Services P Ltd.
Appeals filed by the assessee for the AY.1997-98 and 1998-99 are allowed in part.
िनधा[ǐरती Ʈारा दाǔखल कȧ गई िन.व. 1997-98 तथा 1998-99 कȧ अपीलɅ आँिशक ǽप से मंजूर कȧ जाती हɇ .
Order pronounced in the open court on 07th August,2013.
आदे श कȧ घोषणा खुले Ûयायालय मɅ Ǒदनांक 7 vxLr,2013 को कȧ गई ।
Sd/- Sd/-
(आर.के.गुƯा.
ा R.K. Gupta) राजेÛि/Rajendra)
(राजे ि
Ûयाियक सदःय /JUDICIAL MEMBER लेखा सदःय /ACCOUNTANT MEMBER
मुंबई/Mumbai,Ǒदनांक/Date: 07th August,2013
SK
आदे श कȧ ूितिलǒप अमेǒषत/
षत Copy of the Order forwarded to :
1. Assessee /अपीलाथȸ 2. Respondent /ू×यथȸ
3. The concerned CIT (A) /संबƨ अपीलीय आयकर आयुƠ, 4. The concerned CIT /संबƨ आयकर आयुƠ
5. DR "WT" Bench, ITAT, Mumbai /ǒवभागीय ूितिनिध "धनकर" खंडपीठ,आ.अ.Ûयाया.मुंबई
6. Guard File/गाड[ फाईल स×याǒपत ूित //True Copy// आदे शानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai