Income Tax Appellate Tribunal - Pune
Wealth-Tax Officer,, vs Shri Dinkar Chendu Nehete,, Jalgaon on 30 June, 2017
आयकर अऩीऱीय अधधकरण "ए" न्यायऩीठ ऩण
ु े में ।
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, PUNE
श्री डी. करुणाकरा राव, ऱेखा सदस्य, एवं श्री ववकास अवस्थी, न्याययक सदस्य के समक्ष ।
BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM
धनकर अऩीऱ सं. / WTA Nos. 23 to 27/PUN/ 2016
यनधाारण वषा / Assessment Years : 2005-06 to 2009-10
The Wealth Tax Officer,
Ward - 1(1), Jalgaon
.......अऩीऱाथी / Appellant
बनाम / V/s.
Shri Ravindra Dinkar Nehete,
6, Shreyas Building, Ganeshwadi,
Jalgaon - 425001
PAN : ADOPN0074E
......प्रत्यथी / Respondent
धनकर अऩीऱ सं. / WTA Nos. 33 to 37/PUN/ 2016
Assessment Years : 2005-06, 2006-07 & 2008-09 to 2010-11
The Dy. Commissioner of Wealth Tax,
Circle - 1, Jalgaon
.......अऩीऱाथी / Appellant
बनाम / V/s.
Shri Dinkar Chendu Nehete,
6, Shreyas Building, Ganeshwadi,
Jalgaon - 425001
PAN : ABUPN3207B
......प्रत्यथी / Respondent
Assessee by : Smt. Deepa Khare
Revenue by : Shri Mukesh Jha
सुनवाई की तारीख / Date of Hearing : 29-06-2017
घोषणा की तारीख / Date of Pronouncement : 30-06-2017
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WTA Nos. 23 to 27 & 33 to 37/PUN/2016
आदे श / ORDER
PER BENCH :
These set of ten Wealth Tax Appeals have been filed by the Revenue. WTA Nos. 23 to 27/PUN/2016 are directed against the order of Commissioner of Wealth Tax (Appeals)-2, Nashik dated 25-02-2016 common for the assessment years 2005-06 to 2009-10 in the case of Shri Ravindra Dinkar Nehete. WTA Nos. 33 to 37/PUN/2016 for the assessment years 2005-06, 2006-07, 2008-09, 2009-10 and 2010-11 are directed against the order of Commissioner of Wealth Tax (Appeals)-2, Nashik dated 25-02-2016 common for the aforesaid assessment years in the case of another assessee Shri Dinkar Chendu Nehete. The grounds raised by the Department in all the ten appeals are identical and are arising from same set of facts, therefore, these appeals are taken up together for adjudication and are decided by this common order.
2. The Revenue in grounds of appeal have assailed the findings of Commissioner of Wealth Tax (Appeals) primarily on account of excluding the properties owned by the assessees from wealth tax net by giving the benefit of expression „debts owed‟ in section 2(m) of the Wealth Tax Act, 1957 (hereinafter referred to as "the Act"). Since, the issue involved and the facts in all the appeals are identical, for the sake of convenience and brevity we are taking WTA No. 23/PUN/2016 as a lead case and are referring to the facts from the said appeal.
3. The facts of the case as emanating from record are: The assessee is a Director of Ram Infrastructures Ltd., Jalgaon. The said company had 3 WTA Nos. 23 to 27 & 33 to 37/PUN/2016 taken loan from the bank. The assessee offered his personal properties/assets as co-lateral security for the loan availed by the aforesaid company. The assessee in valuation report furnished to the Bank inflated the value of properties for availing higher loan. Notice u/s. 17 of the Act was issued to the assessee. In compliance of the said notice the assessee filed return of wealth for the impugned assessment year. The Assessing Officer made addition of the difference in value of assets as declared by the assessee in the return of wealth tax and value of assets reported to the bank for availing loan.
Aggrieved by the assessment order, the assessee carried the matter in appeal before the Commissioner of Wealth Tax (Appeals), assailing the findings of Assessing Officer with respect to valuation of assets. The Commissioner of Wealth Tax (Appeals) granted relief to the assessee on the premise that since the assets have been pledged with the bank, therefore, they are deductible while computing net wealth within the meaning of section 2(m) of the Act. To further fortify his view the Commissioner of Wealth Tax (Appeals) draws support from the decision rendered by Pune Bench of the Tribunal in the case of Biyani Group in ITA Nos. 12 to 41/PN/2014 for the assessment years 2005-06 to 2009-10 decided on 31- 07-2014 and the decision of Hon‟ble Kerala High Court in the case of Commissioner of Income Tax Vs. Thressiamma Abraham reported as 227 ITR 812. Against the findings of Commissioner of Wealth Tax (Appeals) the Revenue is in appeal before the Tribunal.
4. Shri Mukesh Jha representing the Department submitted that during the course of assessment proceedings, the Assessing Officer noticed that in the return of wealth tax the assessee has adopted Govt. ready 4 WTA Nos. 23 to 27 & 33 to 37/PUN/2016 reckoner rate for valuation of immovable properties. The rates adopted by the assessee are far less than the rates given in valuation report obtained by the assessee from approved valuer at the time of taking loan from the bank. The Assessing Officer has worked out the difference between the two rates and has made the addition of the difference. The Commissioner of Wealth Tax (Appeals) has erred in deleting the additions by holding that the assets pledged with the bank for obtaining loan are deductible u/s. 2(m) of the Act. The ld. DR contended that the Commissioner of Wealth Tax (Appeals) has erred in placing reliance on the decision of Tribunal in the case of Biyani Group (supra) and the decision of Hon‟ble Kerala High Court in the case of Commissioner of Income Tax Vs. Thressiamma Abraham (supra). In the present case the loan has been taken by the company and not the assessee. The assessee has merely given co-lateral security. The primary responsibility for repayment of loan is that of the company and not the assessee. It is only in the case of eventuality of non- payment of loan by the company, the bank will enforce recovery of loan from the assessee. Even in that case, the assessee has right to be indemnified by the company. The company and the assessee are two different entities, therefore, the loan availed by the company is not deductible from the wealth of assessee. To support his submissions the ld. DR placed reliance on the decision of Hon‟ble Supreme Court of India in the case of Commissioner of Wealth Tax Vs. Raja Vishwanath Pratap Singh reported as 222 ITR 189.
5. On the other hand Smt. Deepa Khare appearing on behalf of the assessee submitted that the documents on record clearly show that the assessee has not claimed deduction u/s. 2(m) of the Act. The issue 5 WTA Nos. 23 to 27 & 33 to 37/PUN/2016 relating to claim of deduction u/s. 2(m) was not even raised before the Commissioner of Wealth Tax (Appeals). In support of her contentions the ld. Counsel for the assessee draws our attention to the return of net wealth along with computation filed by the assessee for assessment year 2005-06 at pages 84 to 86 of the paper book. The ld. Counsel for the assessee further referred to the written submissions filed by the assessee before the Commissioner of Wealth Tax (Appeals) at pages 9 to 39 of the paper book. The ld. Counsel submitted that even in the grounds of appeal raised before the First Appellate Authority there is no mention regarding claim of deduction u/s. 2(m) of the Act. The assessee had filed appeal before the Commissioner of Wealth Tax (Appeals) against the additions made by the Assessing Officer on the basis of approved valuer report. The Commissioner of Wealth Tax (Appeals) while adjudicating the matter suo moto granted the benefit of deduction u/s. 2(m) to the assessee by placing reliance on the decision of Tribunal in the case of Biyani Group (supra) and the decision of Hon‟ble Kerala High Court in the case of Commissioner of Income Tax Vs. Thressiamma Abraham (supra).
5.1 The ld. Counsel for the assessee submitted that the assessee is aggrieved by the valuation adopted by the Assessing Officer to determine the net wealth of the assessee. The approved valuer report on the basis of which the Assessing Officer has made addition was obtained by the assessee for availing bank loans. In the valuation report the value of assets is highly inflated for obtaining higher bank loans. The ld. Counsel submitted that similar additions were made by the Assessing Officer in the case of Shri Pradeep Dinkar Nehete in assessment years 2005-06 to 2009-10. The assessee filed appeal before the Commissioner of Wealth Tax 6 WTA Nos. 23 to 27 & 33 to 37/PUN/2016 (Appeals) against the additions made by Assessing Officer based on the report of approved vlauer. The Commissioner of Wealth Tax (Appeals) sought DVO‟s report for proper valuation of the properties. The valuation made by the DVO was in the same range as given in Govt. ready recker. The Commissioner of Wealth Tax (Appeals) accepted the value of assets as per Govt. ready recker. The Department assailed the findings of Commissioner of Wealth Tax (Appeals) before the Tribunal in WTA Nos. 02 to 06/PN/2015. The Tribunal dismissed the appeals of the Department and upheld the value adopted by Commissioner of Wealth Tax (Appeals) as per Govt. ready reckner. The ld. Counsel submitted that in the present set of appeals before the Commissioner of Wealth Tax (Appeals), the prayer of the assessees was to value the assets as per Govt. ready reckoner rate.
6. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The Revenue has assailed the findings of Commissioner of Wealth Tax (Appeals) for deleting the additions on the premise that properties given as co-lateral security by the assessee constitutes „debts owed‟ by the assessee for determining net wealth u/s. 2(m) of the Act. A perusal of the documents on record show that the assessee in his return of wealth has not claimed deduction in respect of properties mortgaged as co-lateral security in respect of loan taken by the company Ram Infrastructures Limited. Even in the grounds of appeal raised before the First Appellate Authority, the assessee has not claimed deduction in respect of properties mortgaged as co-lateral security for determining net wealth. The assessee in appeal before the Commissioner of Wealth Tax (Appeals) has assailed the addition merely on account of higher valuation of assets. The assessee in his return 7 WTA Nos. 23 to 27 & 33 to 37/PUN/2016 of wealth has declared wealth on the basis of valuation as per Govt. ready reckoner. The Assessing Officer made addition by adopting the value of assets as per approved valuer‟s report furnished by the assessee to the Bank at the time of taking loan by the company. After perusal of the impugned order we are of considered view that the Commissioner of Wealth Tax (Appeals) has granted relief to the assessee which was not even urged before him. The issue before the Commissioner of Wealth Tax (Appeals) was with respect to valuation of assets. The assessee had not raised any ground claiming the benefit of deduction in respect of „debts owed‟, yet the Commissioner of Wealth Tax (Appeals) granted relief to the assessee on the above said count.
7. Thus, in view of the facts of the case and documents on record, we are of considered view that the matter needs a re-visit to the file of Commissioner of Wealth Tax (Appeals). We find that Co-ordinate Bench of the Tribunal in the case of one of the group assessees Shri Pradeep Dinker Nehete (supra) has decided the issue of valuation of assets. The Commissioner of Wealth Tax (Appeals) while deciding the appeals of the assessee afresh shall consider the aforesaid decision of Co-ordinate Bench of the Tribunal and shall also take note of the decision of Hon‟ble Supreme Court of India in the case of Commissioner of Wealth Tax Vs. Raja Vishwanath Pratap Singh (supra). The Commissioner of Wealth Tax (Appeals) before deciding the appeal shall crystallize the point of determination and after granting opportunity of hearing to the assessee, in accordance with law pass the order. The impugned order is set aside and the appeal of the Revenue for assessment year 2005-06 is allowed for statistical purpose.
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WTA Nos. 23 to 27 & 33 to 37/PUN/2016
8. Since, the facts and the issues raised in all other appeals are identical, the findings given by the Tribunal in WTA No. 23/PUN/2016 for assessment year 2005-06 would mutatis mutandis apply in the facts and circumstances of the other appeals, as well. Accordingly, all the appeals of the Revenue are allowed for statistical purpose.
9. In the result, all the appeals of the Revenue are allowed for statistical purpose.
Order pronounced on Friday, the 30th day of June, 2017.
Sd/- Sd/-
(डी. करुणाकरा राव/D. Karunakara Rao) (ववकास अवस्थी / Vikas Awasthy)
ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER
ऩण
ु े / Pune; ददनाांक / Dated : 30th June, 2017
RK
आदे श की प्रयिलऱवऩ अग्रेवषि / Copy of the Order forwarded to :
1. अऩीऱाथी / The Appellant.
2. प्रत्यथी / The Respondent.
3. धनकर आयुक्त (अऩीऱ) / The CWT(A)-2, Nashik
4. प्रधान धनकर आयुक्त / The Pr. CWT-2, Nashik
5. ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, "ए" बेंच, ऩुणे / DR, ITAT, "A" Bench, Pune.
6. गाडड फ़ाइऱ / Guard File.
//सत्यावऩत प्रयत // True Copy// आदे शानुसार / BY ORDER, सहायक ऩांजीकार / Assistant Registrar, आयकर अऩीऱीय अधधकरण, ऩण ु े / ITAT, Pune