Income Tax Appellate Tribunal - Mumbai
Dcwt 9(2), Mumbai vs Assessee on 1 December, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH "WT",
MUMBAI
BEFORE SHRI R.S.SYAL (A.M) & SHRI N.V.VASUDEVAN(J.M)
WTA NO.65/MUM/2011(A.Y. 2008-09)
DCWT, Range 9(2), M/s. Parle Bisleri Pvt. Ltd.
Aaykar Bhavan, R. No.218, Western Express Highway,
2nd Floor, MK Road, Vs. Chakala, Andheri,
Mumbai 400 020. Mumbai - 400 099.
(Appellant) PAN:AABCA2056N
(Respondent)
Appellant by : Shri Rajneesh K. Arvind
Respondent by : Shri Vijay Mehta
Date of hearing : 01/12/2011
Date of pronouncement : 16/12/2011
ORDER
PER N.V.VASUDEVAN, J.M,
This is an appeal by the revenue against the order dated 20/5/2011 of CWT(A)-20, Mumbai relating to assessment year 2008-09. Ground of appeal raised by the revenue reads as follows:
"Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was correct in accepting the revised computation field by the assessee wherein the very nature of income was sought to be changed, without filing a revised return."
2. The assessee is engaged in the business of manufacture and sale of the packed drinking water marketed under trademark "Bisleri". The assessee filed its wealth tax return on 30/9/2008 declaring gross wealth of Rs. 28,78,73,440/-. It comprised of the following assets.
2 WTA NO.65/MUM/2011(A.Y. 2008-09)Sr. Nature of Asset Value (Rs. Value (Rs.)
No.
1. Residential house at Nepean Sea Road, 1,19,44,050
Mumbai (valued at cost)
2. Commercial establishment:
JMC House at Chakala, Andheri (East) 2,33,07,505
Bisleri building 1,32,00,000
Less Properpty taxes paid (42,39,915)
3,22,67,590
Less Standard deduction @ 15% (18,40,139)
2,74,27,452
Rent capitalization factor (being not a freehold 10 property) Value of commercial establishments as per 27,42,74,515 Rent Capitalisation Method
3. Motor Cars 16,54,871 TOTAL WEALTH 28,78,73,436 During the course of the assessment proceedings u/s. 16(2), the assessee filed a revised computation of net wealth by claiming exemption of commercial property of Rs. 27,42,74,515/- u/s. 2(ea)(5) of the Wealth tax Act, 1957. The A.O., however, assessed total gross wealth at Rs. 28,78,73,440/- as per the return of Wealth field on 30/09/2008. Thus the claim for exemption of commercial property of Rs. 27,42,74,515/- u/s. 2(ea)(5) was not accepted by the AO. According to the AO, a claim made without filing a revised return of wealth in accordance with the provisions of the Act cannot be entertained. In this regard, the AO relied on the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT 284 ITR 323 wherein it was held that the A.O has no power to entertain a claim of deduction otherwise than by filing a revised return. Similarly, in the case of wealth tax assessment also, the Assessing Officer has no power to entertain any claim made during the assessment proceedings. The AO did not go into the merits of the claim for exemption made by the Assessee in the revised computation of income.
3 WTA NO.65/MUM/2011(A.Y. 2008-09)3. Before CWT(A) the assessee submitted that according to Circular No.14 (XL-35) dated 11/4/1955 the CBDT has clarified that the AO is bound to grant relief of refund suo-motu or can do so on the assessee pointing out that he is entitled to relief in the course of assessment proceedings even though the revised return has not been filed. It was further pointed that the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra) has held that a new claim can raised before the appellate authority even without there being a revised return.
4. The CIT(A) on the question of entertaining claim for exemption made by the assessee without revised return of income held as follows:
"2.9. It is a fact that revised claims can not be entertained at the A.O. stage if it is not backed by revised return filed on time. But at the appellate stage this restriction does not apply. Even the judgement of the Supreme Court in Goetze India does not part fetters on any appellate authority. It is an established rule of Juris Prudence that technical considerations should not override substantial justice. It is well settled that the procedure is hand made for justice and should not be allowed to be choked only because of some inadvertent error or omission. This proposition finds favour in the following rulings:
(i) Mahalaxmi Sugar Mills Ltd [160 I.T.R. 9201 (SC)
(ii) Balmukund Acharya v DCIT (2009) 310 I.T.R. 310 (Bom)
(iii) Chicago Pneumatic India Ltd v. DCIT (15 SOT 252) In the present case, the fact that the properties in question are commercial in nature is not disputed by the WTO and she has depicted it as such in her computation in the assessment order an so this technical objection is overruled. The claim made through revised computation is held to be valid. This ground is allowed."
5. Besides the above the assessee also submitted that the AO has not disputed that the properpty in question was a commercial property and, therefore, outside the purview of definition of asset as laid down in Section 4 WTA NO.65/MUM/2011(A.Y. 2008-09) 2(ea) of the Wealth Tax Act 1957 (the Act). In this regard the Assessee pointed out that section 2(ea) Act defines Assets as follows:
(ea) "assets", in relation to the assessment year commencing on the 1st day of April, 1993, or any subsequent assessment year, means--
(i) any building or land appurtenant thereto (hereinafter referred to as house), whether used for residential or commercial purposes or for the purpose of maintaining a guest house or otherwise including a farm house situated within twenty-five kilometres from local limits of any municipality (whether known as Municipality, Municipal Corporation or by any other name) or a Cantonment Board, but does not include--
(1) a house meant exclusively for residential purposes and which is allotted by a company to an employee or an officer or a director who is in whole-time employment, having a gross annual salary of less than five lakh rupees ;
(2) any house for residential or commercial purposes which forms part of stock-in-trade;
(3) any house which the assessee may occupy for the purposes of any business or profession carried on by him ;
(4) any residential property that has been let-out for a minimum period of three hundred days in the previous year ;
(5) any property in the nature of commercial establishments or complexes.
It was submitted that with the advent of taxing only non-productive assets, the definition of "asset" under section 2(ea) of the Wealth-tax Act, does not include commercial buildings. It was further pointed out that the term 'commercial establishment or commercial complex is not defined in the Act. It was urged that in the absence of such definition, references have to be taken from law dictionary meanings and judicial precedents. It was submitted that the Law Lexicon defines a commercial establishment as a place where two minds meet together to strike a business deal for profit. It 5 WTA NO.65/MUM/2011(A.Y. 2008-09) was urged that as per Black's law Dictionary, 'Commercial Establishment would mean a place where commodities are exchanged or sold or a profit- making establishment (i.e. an establishment carrying on a business or profession). Attention was drawn to the decision of the Hon'ble Pune
1.T.A.T. in the case of Satvinder Singh Kalrav DCWT (2007) 109 I. T.D. 241(Pune) wherein it was held that "in order to cover a case under sub-cl.(5), of Sec.2(ea) of the Act, it is not necessary that the property in the nature of commercial establishments or complexes should be occupied by the assessee for the purpose of any business or profession carried on by him as in the case covered by sub-cl. (3). That the nature and purpose of use of the property is material irrespective of the fact whether it is used or occupied either by the assessee himself or anybody else for the purpose of any business or profession carried on by them, as the case may be. A property can not only by its very nature be classified as a commercial establishment or complex unless the same is also used in a business and nothing else. Hence, the words 'commercial establishment or complex' as the case may be appear to be used in the sense that the property must be in the nature or commercial property and the same must also be used for the purpose of trade or business and nothing else. It was argued that the Hon'ble Calcutta High Court in the case of Maynak Poddar (HUF) v WTO (2003) 262 I. T. R. 633(Cal) has held that whether an item of property is chargeable to tax or not is dependent on the true construction of s. 3, in the strict sense it is enacted. There can not be any ambiguity in a charging section. If two views are possible, the one beneficial to the assessee is to be adopted. Unless a property is chargeable under the charging section, no tax can be levied thereupon. It was submitted that even if the assessee had included an item of asset which is not an asset within the meaning of the Act, in his return that would not preclude the assessee from claiming the benefit of law. There can not be any estoppel against statute. A property which is not otherwise 6 WTA NO.65/MUM/2011(A.Y. 2008-09) taxable, can not become taxable because of misunderstanding or wrong understanding of law by the assessee or because of his admission or his misapprehension can make it taxable. The taxability or the authority to se fax is independent of admission. Neither there can be any waiver of right by the assessee. The department can not rely upon any such admission or misapprehension if it is not otherwise taxable.
6. The Assessee pointed out that during the financial year ended 31 March, 2008 it had let out its property JMC House at Chakala, Mumbai as follows:
Name of the tenant Property let out Nature of business activities on by the tenant.
Jet Airways Ground florr, JMC House, Corporate Office Chakala, Mumbai.
Cartigen First Floor, JMC house, Business
Chakala, Mumbai.
Capstone & Brickswor Second Floor, JMC House, Business
Chakala, Mumbai.
Hafele Third Floor, JMC House, Sale of parts for furniture.
Chakala, Mumbai
Bislery International Pvt. Factory building, Chakala, Bisleri water
Ltd. Mumbai. manufacturing.
It was submitted that the properties in dispute had been let out and have been used by the tenants for the purpose of carrying on business and profession and therefore the properties have to be characterized as commercial establishments falling within the exception to the definition of an asset under section 2(ea) of the Act.7 WTA NO.65/MUM/2011(A.Y. 2008-09)
7. On the claim of the Assessee that the asset being commercial establishment and as such outside the purview of the definition of the assets given under section 2(ea) of the Act, the CIT(A) held as follows:
"3.9. I have perused the wealth tax order and the written submissions. The fact that the properties are commercial in nature is not disputed by the WTO as is evident from the decision at para-2.8 while deciding the 2 ground of appeal. Hence, once the technical objection is overruled there remains no issue regarding establishing its nature. However, the appellant has made detailed submission on merits where it has highlighted that not only the properties are located in a well- know commercial Hub (Chakala) but it is occupied by business concerns who are carrying out commercial activities from there. The commercial property is also generating income and hence it can not be said that they are unproductive.
...................................
3.11. In sum up, the properties are in the nature of commercial property which is also being used for the purposes of trade or business and hence qualifies to be a commercial establishment or complex. The same is therefore treated as exempt u/s.2(ea)(i)(5) of the Income Tax Act. This ground is allowed and addition of Rs.27,42,74,515 is deleted."
8. Aggrieved by the order of the CIT(A) the revenue has preferred the present appeal before the Tribunal.
9. We have heard the rival submission. We are of the view that the order of the CWT(A) does not call for any interference. As far as the question regarding claim for exemption of the property on the ground that they were in the nature of commercial establishment without filing a revised return, the law is by now well settled that the restriction on the powers of the AO to entertain such claim without a revised return does not apply to the appellate authorities under the Act as has been laid down in the following decisions.
1. Hero Honda Finlease Ltd. , 115 TTJ 752 (Del) ™ 8 WTA NO.65/MUM/2011(A.Y. 2008-09)
2. Chicago Pneumatic India Ltd., 15 SOT 252 (Mum)
3. Emersion Network Power Inida P. Ltd., 122 TTJ 67 (Mum)
4. Mahavir Spg. Mills Ltd., 303 ITR 353 (P&H)
5. Jai Parabolic Springs Ltd., 306 ITR 42 (Del)
6. Napta Jhakri Joint Venture, 131 TTJ 702/ 37 SOT 160(Mum) The CWT(A) was therefore, justified in entertaining the claim of the assessee even without a revised return. Consequently, this objection of the revenue is held to be without any basis.
9. As far as the question whether property is in the nature of commercial establishment is concerned the grounds of appeal raised by the revenue do no challenge the findings of the CWT(A) in this regard. Nevertheless we have considered the submissions of the Assessee before the CWT(A) and the order of the CWT(A) on this issue and are of the view that no fault can be found with the findings of the CWT(A). We have already reproduced the submissions of the Assessee before CWT(A) in this regard, which is self- explanatory and with which, we agree. The shift in policy of taxing only non- productive assets under the Act, goes in favour of the Assessee and leaves no doubt in our mind that the order of CWT(A) needs to be upheld. We, therefore, uphold the order of the CWT(A) and dismiss the appeal by the revenue.
10. In the result, the appeal by the revenue is dismissed.
Order pronounced in the open court on the 16th day of Dec.
2011.
Sd/- Sd/-
( R.S.SYAL ) (N.V.VASUDEVAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated. 16th Dec. 2011
9 WTA NO.65/MUM/2011(A.Y. 2008-09)
Copy to: 1. The Appellant 2. The Respondent 3. The CIT City -concerned
4. The CIT(A)- concerned 5. The D.R"WT" Bench.
(True copy) By Order
Asst. Registrar, ITAT, Mumbai Benches
MUMBAI.
Vm.
10 WTA NO.65/MUM/2011(A.Y. 2008-09)
Details Date Initials Designation
1 Draft dictated on 7/12/11 Sr.PS/PS
2 Draft Placed before author 8/12/11 Sr.PS/PS
3 Draft proposed & placed JM/AM
before the Second Member
4 Draft discussed/approved by JM/AM
Second Member
5. Approved Draft comes to the Sr.PS/PS
Sr.PS/PS
6. Kept for pronouncement on Sr.PS/PS
7. File sent to the Bench Clerk Sr.PS/PS
8 Date on which the file goes to
the Head clerk
9 Date of Dispatch of order