2016 (7) TMI 900 - HC - Wealth-tax

Applicability of Circular No. 1979 dated 27.03.2000 - excess liability allowed by mistake and rectified under Section 35 of the Wealth Tax Act - Tribunal ordered as no exceptional circumstances as provided in the above said circular was pointed out by the learned D.R. for filing this appeal before this Tribunal - Held that - Though in the instant appeal, Revenue has assailed the correctness of the order of the Tribunal, inter alia on the grounds that the Tribunal has missed to note that the Revenue has raised the special circumstances, referred to, in paragraph 3 of the Circular applicable to the facts of the present case, no material has been placed before this Court to substantiate the same. That apart, Revenue has raised the said ground for the first time before this Court, which is also not substantiated. Thus accepting the contention of the respondent/ assessee, all the substantial questions of law have to be answered against the Revenue

Summary

Issues: Appeal against order in W.T.A. 82/Mds/2004 for assessment year 1998-99; Disallowance of excess liability; CBDT Circular No. 1979 dated 27.03.2000; Maintainability of appeal before Income Tax Tribunal.

Analysis:

1. Excess Liability Disallowance: The respondent, a Private Limited company, faced an order under Section 35 of the Wealth Tax Act, which restricted the liability to the value of the building, disallowing an excess amount. Appeals were filed by the Revenue, but the Commissioner of Wealth Tax (Appeals) and the Income Tax Tribunal ruled in favor of the assessee. The Tribunal dismissed the appeal based on the tax effect being less than ?1.00 lakh, citing CBDT Circular No. 1979 dated 27.03.2000. The substantial questions of law raised by the Revenue focused on the Tribunal's failure to decide on merits, adherence to the circular, and consideration of the excess liability issue.

2. CBDT Circular No. 1979: The CBDT Circular revised monetary limits for filing appeals, setting a threshold of ?1,00,000 for appeals before the Appellate Tribunal in income-tax matters. The Circular specified exceptional circumstances warranting appeal irrespective of the revenue effect, including accepted revenue audit objections and challenges to the constitutional validity of tax provisions. The Tribunal applied this Circular to dismiss the Revenue's appeal, emphasizing the lack of exceptional circumstances and citing previous cases where similar appeals were rejected based on the Circular.

3. Maintainability of Appeal: During the proceedings, the Income Tax Department argued that the Tribunal should not have dismissed the appeal, highlighting that wealth tax assessments are consequential to revenue audit objections. However, the respondent's counsel contended that the Revenue failed to substantiate exceptional circumstances as per the Circular. The Tribunal, after examining the case, found no exceptional circumstances presented by the Revenue and dismissed the appeal, in line with the Circular's provisions.

4. Judgment and Dismissal: The High Court, after hearing arguments from both parties and reviewing the material on record, upheld the Tribunal's decision. The Court noted that the Revenue's contentions lacked substantiation and were raised for the first time during the proceedings. Consequently, all substantial questions of law were answered against the Revenue, leading to the dismissal of the Tax Appeal. No costs were awarded in the judgment.