Income Tax Appellate Tribunal - Mumbai
Shamrock Industrial Co.Ltd, Mumbai vs Department Of Income Tax on 18 July, 2013
„ ‟
IN THE INCOME TAX APPELLATE TRIBUNAL "WT", BENCH, MUMBAI
,
BEFORE SHRI R.K.GUPTA, JM & SHRI P.M.JAGTAP, AM
TA No.16/Mum/2013
( Assessment Year :2000-2001)
DCWT, Cir-3(3), Mumbai-20 Vs. M/s Shamrock Industrial Co.
Ltd. 1008, Maker Chamber-V,
Nariman Point, Mumbai-400
021.
PAN/GIR No. : AAACS 5687 E
( Appellant) .. ( Respondent)
/Revenue by : Mr. S.K.Singh
/Assessee by : Mr. K.C.Pandey
Date of Hearing : 18th July, 2013
Date of Pronouncement : 31st July, 2013
ORDER
Per Shri R.K.Gupta, JM:
The department has preferred this appeal against the order dated 10-10-2012, passed by the CIT(A)-7, Mumbai, relating to assessment year 2000-01.
2. The department is objecting in deleting the addition made by the AO of Rs.77,29,298/- to the taxable assets under the W.T. Act on account of urban land.
3. In this case, notice under section 17 of the Act was issued to the assessee. In response to the said notice the assessee filed return declaring net worth at Rs.5,73,921/-. The assessment was completed 2 WTA No.16/2013 at Rs.68,03,219/- and wealth tax liability was determined at Rs.1,33,682/-. The AO found that in the Income Tax proceeding an addition at Rs.45 lakhs has been made on account of development expenditure on the land in question, therefore, notice under Section 17 was issued by the AO. As stated above, return was filed. The AO found that the development expenses incurred for land development of Rs.45 lakhs is of capital in nature and because of its expenditure the value of land has increased. The cost of improvement on any capital asset is included in the cost of acquisition and the net wealth is computed on the cost of acquisition. Hence, the contention of the assessee before the AO that the land lost its character when the development was started and the work in progress has been shown in the balance sheet valued at Rs.77,29,298/-. In this way, the total wealth was computed at Rs.68,03,200/-.
4. Detailed submissions were filed before the CIT(A). It was submitted that since the construction is not completed, therefore, the asset cannot be brought to tax under the Wealth Tax Act. Reliance was placed on various case laws i.e. in the case of CIT Vs. Smt. Neena Jain, reported in 330 ITR 157 (P&H), in the case of A.A.Salam Vs. ACWT, 106 TTJ 1140 (Cochi), in the case of C.W.T. Vs. Girdhar G. Yadalam, 325 ITR 223 (Karn.), in the case of Federal Bank Ltd. Vs. JCWT, 108 TTJ 416 and various other decision mentioned in the order of CIT(A). After considering the above decisions and contentions of the assessee, the CIT(A) found that the AO was not justified in treating the 3 WTA No.16/2013 work in progress as capital asset liable for wealth tax. Accordingly, he deleted the addition. Now, the department is in appeal here before the Tribunal.
5. Learned DR placed reliance on the order of AO. On the other hand, learned counsel of the assessee placed reliance on the order of CIT(A).
6. After considering the submission and perusing the material on record, we found that the appeal of the department is liable to be dismissed even in limine as the tax effect in this appeal is less than Rs.2 lakhs. Even on merit, the finding of the learned CIT(A) could not be controverted, which are recorded in para 3.3 as under :-
3.3 I have considered the AO's order as well as appellant A/R's submission. I have also taken note of ITAT's order in the appellant's own case for the year under consideration through which the order of the CWT(A) was set aside to the AO for recomputing the total wealth of the appellant company after affording an opportunity to the appellant. I find that the ITAT, Mumbai vide its order dated 16/12/2011 in W.T.A. No. 18/Mum/2011 has set aside the quantum appeal for readjudication for determining the total wealth of the appellant company. Having taking note of AO's order as well as appellant's AR's submission, I am of the considered view that the AO was misconceived while determining the total wealth of the appellant company presuming that the addition made to the said land was as a cost of improvement of the said asset i.e. land and hence he opined that the addition to the value of the said land will amount to addition to cost of acquisition to the land and accordingly he added the same to the total wealth of the appellant company.
However, after taking note of all the facts available on records and also taking note of decision of various Courts and Tribunals as extracted above in the appellant's submission. I am of the considered view that the said addition to the land has not yet completed and the construction on the said land was still under 'construction and hence the said land ceases to be in the ambit of vacant land for its taxability under Wealth Tax Act. The appellant's submission and document adduced vide letter dated 22/10/2012 clearly suggests that the construction on the land has not been completed and there is dispute arising of the appellant through its 4 WTA No.16/2013 contractors namely M/s. Conart Engineers Ltd. and hence by no stretch of imagination the said addition can be said forming part of taxable asset under Wealth Tax Act as it is still remaining under construction. Taking note of the decision of Kerala High Court in the case of Apollo 1'yres Ltd v / s. ACIT reported in 325 ITR 528 and Punjab & Haryana High Court in the case of CIT Vs. Smt. Neena Jain reported in 330 ITR 157 (P&H), I consider it proper and appropriate to hold that AO was not correct in taking the amount of Rs. 77,29,298/- in determining the total wealth of the appellant company and accordingly the addition so made is deleted."
7. Since the findings of learned CIT(A) are given after taking into consideration of various case laws and submission of the assessee, which remained uncontroverted and the tax effect is less than Rs.2 lakhs, therefore, in view of all these facts and circumstances of the case, We confirm the order of the learned CIT(A).
8. Resultantly, appeal of the department is dismissed.
Order pronounced in the open court on this 31st day of Jul.2013.
Sd/- Sd/-
( ) ( )
(P.M.JAGTAP) (R.K.GUPTA)
/ ACCOUNTANT MEMBER / JUDICIAL MEMBER
Mumbai; Dated : 31/07/2013
/pkm, PS
Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. / The CWT(A), Mumbai .
4. / CWT
5. / DR, ITAT, Mumbai.
6. Guard file.
//True Copy//
/ BY ORDER,
(/Asstt. Registrar)
/ ITAT, Mumbai