2005 (1) TMI 75 - HC - Wealth-tax

1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in excluding the value of route permit from the assessable wealth of the assessee observing that the same did not fall within the definition of asset as defined in section 2(e)(v)? - Tribunal has found that the minimum period for which a route permit can be granted is three years and maximum period is five years under the Motor Vehicles Act, 1939, it cannot be said that the respondent-assessee had interest of six years or more in the route permit. Therefore, the Tribunal had rightly deleted the addition made on this account. - We answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue.

Summary

Issues:
1. Exclusion of the value of route permit from assessable wealth under the Wealth-tax Act, 1957.

Analysis:
The High Court of ALLAHABAD was presented with a question of law regarding the exclusion of the value of a route permit from the assessable wealth of the assessee under the Wealth-tax Act, 1957. The Tribunal had to determine whether the route permit fell within the definition of an asset as per section 2(e)(v) of the Act. The reference pertained to the assessment years 1984-85 and 1985-86.

The respondent-assessees had initially shown only the value of their buses, excluding the route permits, in their wealth tax return for the assessment year 1984-85. However, the Wealth-tax Officer included the value of the route permits in the taxable wealth, a decision upheld by the Appellate Assistant Commissioner. On further appeal, the Tribunal considered the provisions of the Motor Vehicles Act, 1939, which stipulated the duration and transferability of route permits. The Tribunal observed that the route permit had a minimum duration of three years and a maximum of five years, and it was non-transferable without permission and subject to cancellation. Relying on the definition of asset in section 2(e)(v) of the Act, the Tribunal concluded that the route permits did not constitute an asset and thus deleted the additions to the net wealth.

The High Court examined the relevant legal precedents, including the case of F.S. Ghandhi v. CWT [1990] 184 ITR 34, where properties with expired leases were not considered assets. The Court noted that since the route permits had a maximum duration of five years as per the Motor Vehicles Act, the respondent-assessees did not have an interest of six years or more in the permits. Consequently, the Tribunal's decision to exclude the route permits from the assessable wealth was deemed appropriate based on legal interpretations and precedents.

In conclusion, the High Court answered the question in favor of the assessee and against the Revenue, affirming the Tribunal's decision to exclude the value of route permits from the assessable wealth under the Wealth-tax Act, 1957. The Court also ruled that no costs would be awarded in this matter.