2016 (4) TMI 412 - AT - Wealth-tax

Computation of WDV of the Motor Cars under section 32 or as per rule 20 of the Wealth tax Rules - CIT(A) deleted the addition made by the A.O. in the valuation of the motor cars - Held that - We agree with the contention of of ld AR that the assessee could not gather the information in respect of the insured value of the vehicles being large number of leased out vehicles. The value of motor cars adopted by the assessee has been upheld by the CWT(A) in view of the judgment of case of T.V. Sundaram Iyenger and Sons Ltd. (2006 (1) TMI 45 - HIGH COURT, MADRAS). wherein the WDV of cars was held as basis of market value in the absence of any material produced by the Revenue to show that WDV didn t represent the market value of the vehicle. - Decided against revenue Debt claimed by the assessee in relation to taxable assets - Held that - We find that the assigning of debt on proportionate basis towards assets liable for wealth tax is a more reasonable and judicious method rather than making a arbitrary estimate by the Assessing officer. The CWT(A) has given a reasoned findings on the issue in dispute and, therefore, no interference is required in his findings on the issue discarding the estimate of debt made by the A.O. and accepting the assessee s estimate holding it to be scientific without elucidating the reasons for the same.- Decided against revenue

Summary

Issues: Valuation of motor cars, substitution of WDV method, estimation of debt in relation to assets

Valuation of Motor Cars:
The appeal questioned the deletion of the addition made by the Assessing Officer (AO) in the valuation of motor cars by the Commissioner of Wealth Tax (Appeals) and the substitution of the WDV method for valuation without pointing out any inaccuracies in applying Rule 20 of the IIIrd Schedule. The Revenue contended that the Commissioner ignored the contradiction in the assessee's stand regarding the insured value of motor cars for different assessment years. The Revenue argued that the AO rightly applied Rule 20 as the market value determined by the assessee was significantly different from the value declared. However, the assessee maintained that the WDV method under Section 32 of the Income-tax Act represented the fair value of the motor cars for wealth tax purposes. The Commissioner upheld the assessee's valuation based on the Chennai High Court judgment, emphasizing the practicality of the assessee's approach due to the large number of leased vehicles. The Tribunal agreed with the Commissioner's decision, finding no error in the order and dismissing the Revenue's appeal.

Substitution of WDV Method:
The dispute arose from the substitution of the WDV method for valuation by the Commissioner in place of the method adopted by the AO. The Departmental Representative argued that the AO's method was correct as there was a significant difference in values, justifying the application of Rule 20. Conversely, the Authorized Representative of the assessee contended that the AO's estimate was arbitrary, and the WDV method was based on evidence and practical considerations, as supported by a recent Chennai High Court decision. The Tribunal upheld the Commissioner's decision, stating that the assessee's method was practical and no inconsistencies were found, while the AO failed to provide any material supporting his approach.

Estimation of Debt in Relation to Assets:
The Revenue challenged the acceptance of the assessee's estimate of debt in relation to taxable assets by the Commissioner. The Departmental Representative argued that the AO had to estimate the debt as the exact amount was not provided by the assessee. In response, the Authorized Representative contended that the assessee's method of applying a ratio of total debt to total asset value was more scientific than the AO's arbitrary estimate. The Commissioner supported the assessee's approach, considering it reasonable and judicious compared to the AO's method. The Tribunal agreed with the Commissioner's findings, stating that assigning debt on a proportionate basis towards taxable assets was a more reasonable method.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the Commissioner's decisions on the valuation of motor cars and estimation of debt in relation to assets. The Tribunal found no errors in the Commissioner's reasoning and supported the practical and scientific approaches adopted by the assessee in the valuation and debt estimation processes.