2015 (4) TMI 950 - AT - Wealth-tax

Reopening of assessment - addition made on account of valuation of cars - Held that - Assessee declared the value of motor cars on the basis of the written down value as per the balance sheet, however, the Assessing Officer adopted the insurance value as the value of the motor cars for the purpose of computing the net wealth of the assessee, the Commissioner of Wealth- tax (Appeals) confirmed the action of the Assessing Officer. On second appeal, the Tribunal was also in agreement with the lower authorities in part as the Tribunal confirmed the action of the Assessing Officer in adopting the value adopted on the basis of valuation shown for insurance purposes. However, the Assessing Officer was directed to estimate 80 per cent. of the insurance value. - Following decision of Samrath Knitters P. Ltd. 1996 (11) TMI 99 - ITAT BOMBAY-B and Thermax Ltd. 2006 (12) TMI 484 - ITAT PUNE - Decided in favour of assessee.

Summary

Issues:
- Reopening of assessment under section 17 of the Wealth-tax Act, 1957
- Valuation of cars for wealth-tax purposes

Reopening of Assessment:
The two appeals were filed by the assessee against the order of the Commissioner of Wealth-tax (Appeals) for the assessment years 2005-06 and 2006-07. The assessments were reopened under section 17 of the Wealth-tax Act, 1957, and completed with additions made by the Assessing Officer. The Commissioner of Wealth-tax (Appeals) confirmed the reopening but deleted the addition related to a guest house while confirming the addition on account of car valuation for both years. The assessee challenged the reopening and car valuation additions before the Tribunal, arguing against the Commissioner's decision.

Valuation of Cars for Wealth-tax Purposes:
Regarding the valuation of cars, the assessee declared 80% of the insurance value for wealth-tax purposes instead of the written down value. The Assessing Officer disagreed with this method, stating that the valuation should be based on the written down value as per the Wealth-tax Act, considering wear and tear. The Commissioner of Wealth-tax (Appeals) upheld the Assessing Officer's decision, rejecting the reliance on previous tribunal decisions. The assessee argued that the valuation method was accepted in previous assessments and during income tax proceedings. The Tribunal found in favor of the assessee, citing similar cases where the insurance value of cars was considered for valuation. Following the decisions of co-ordinate Benches in Pune and Mumbai, the Tribunal directed the Assessing Officer to accept the value of cars as declared by the assessee. As the merits were decided in favor of the assessee, the legal ground was not disposed of at that stage, and the appeals were allowed.

This judgment addresses the issues of reopening assessments under the Wealth-tax Act and the valuation of cars for wealth-tax purposes. The Tribunal ruled in favor of the assessee, directing the Assessing Officer to accept the declared value of cars based on insurance value, in line with previous tribunal decisions.