9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (11) TMI 811 - AT - Wealth-taxInclusion of cash on hand of the proprietor business of the assessee to the net wealth of the assessee - Held that - Cash in hand referred to in Section 2(ea)(vi) of the Act represents only the personal cash of the assessee emanating from his personal balance sheet. It nowhere contemplated the inclusion of cash which is held as business asset. If it is so held, then the purpose of valuation method prescribed in Schedule III Rule 14 of the Rule would become redundant. Admittedly, the cash in hand of ₹ 48,81,761/- represents the cash belonging to the business of the assessee and thereby partakes the character of a business asset. In view of all, we have no hesitation in directing the Ld. AO to delete the addition made in the sum of ₹ 48,81,761/- from the value of net wealth representing business cash. Accordingly, the grounds 1 to 4 raised by the assessee are allowed.
Issues involved:
1. Justification of including cash on hand of the proprietor business to the net wealth of the assessee. 2. Application of Global Valuation of business asset as per Rule 14 of Part D of Schedule III of W.T. Rules. 3. Interpretation of Section 2(ea)(vi) of the Wealth Tax Act, 1957. Analysis: 1. The main issue in this appeal was whether the Commissioner of Wealth Tax (Appeals) was correct in upholding the addition of cash on hand of the proprietor business to the net wealth of the assessee. The assessee had included cash in hand as per his personal balance sheet in the statement of net wealth, while the business balance sheet reflected a higher amount. The Assessing Officer added the cash balance as an eligible asset, a decision upheld by the Commissioner. However, the Appellate Tribunal found that the cash in hand represented the business asset of the proprietor and should be subjected to valuation under Rule 14 of Schedule III of the Rules. The Tribunal held that the purpose of Section 2(ea)(vi) was not to include business assets as cash in hand, leading to the direction for deletion of the addition from the net wealth value. 2. The Tribunal analyzed the application of Global Valuation of business assets as per Rule 14 of Part D of Schedule III of Wealth Tax Rules. The assessee had computed the global value of the business asset as per the prescribed procedure, but the Commissioner rejected this argument based on a Kerala High Court decision. However, the Tribunal differentiated the present case by emphasizing that the cash in hand belonged to the business and should be valued under Rule 14. The Tribunal also referred to a Co-ordinate Bench decision supporting the treatment of cash generated from business activities as business assets, not personal cash, aligning with the assessee's contention. 3. The interpretation of Section 2(ea)(vi) of the Wealth Tax Act was crucial in determining whether the cash on hand of the proprietor business should be included in the net wealth. The Tribunal clarified that personal cash of the assessee from the personal balance sheet falls under this section, not cash held as a business asset. By differentiating personal cash from business assets, the Tribunal ensured the valuation method prescribed in Schedule III Rule 14 was not rendered redundant. The Tribunal's decision highlighted the distinction between personal and business assets, leading to the deletion of the addition from the net wealth value. In conclusion, the Appellate Tribunal allowed the appeal partly, directing the Assessing Officer to delete the addition representing business cash from the net wealth value. The Tribunal dismissed other grounds raised by the assessee, emphasizing the distinction between personal and business assets in wealth tax assessment.
|
