1995 (7) TMI 120 - AT - Wealth-tax

Summary

Issues:
1. Inclusion of amount pertaining to tourist/taxi cars in net wealth for Wealth-tax assessment.

Analysis:
The judgment by the Appellate Tribunal ITAT Delhi involved an appeal by the assessee against the order of CWT(A)-XV, New Delhi. The key issue was the inclusion of an amount of Rs. 16,37,000 related to tourist/taxi cars in the net wealth of the assessee for Wealth-tax assessment. The assessee initially declared a net wealth of Rs. 25,74,000, which was later revised to Rs. 9,37,000. The Wealth Tax Officer (WTO) computed the wealth at Rs. 33,73,640 as per the previous year. The CWT(A) included the value of cars in the assets liable for Wealth-tax, despite the assessee's contention that the cars were used for official purposes and should be excluded. The CWT(A) allowed a deduction of Rs. 37,000 for depreciation. The assessee argued that the amendment made by the Finance Act, 1988 should apply, excluding tourist cars used as taxis from wealth computation. The departmental representative contended that the law applicable in the relevant assessment year should prevail and that the amendment was not applicable. The Tribunal considered the legislative intent behind the amendment and case law cited by the assessee. It found the amendment to be clarificatory and applicable to the assessment year 1985-86, excluding the amount related to tourist/taxi cars from wealth computation. The Tribunal directed the WTO to verify if the cars were registered as taxis.

The Tribunal's decision was based on the legislative intent to exclude motor cars used as taxis from wealth computation, as clarified by the amendment introduced in the Finance Act, 1988. The Tribunal found the amendment to be clarificatory and applicable retrospectively to the assessment year 1985-86. The decision was supported by relevant case law and the rationale behind the legislative change to remove unintended hardship. The Tribunal directed the exclusion of the amount related to tourist/taxi cars from wealth computation, subject to verification by the WTO regarding the registration of cars as taxis.

The Tribunal rejected the assessee's alternative ground related to depreciation deduction, as it was consequential to the decision on the inclusion of tourist/taxi cars in wealth computation. The Tribunal noted the reduction in value of cars by an estimated amount of Rs. 37,000 by the CWT(A) and directed the Assessing Officer to withdraw the proportionate amount from the total value of office cars.

In conclusion, the Tribunal partially allowed the appeal, excluding the amount related to tourist/taxi cars from wealth computation for the assessment year 1985-86 based on the clarificatory nature of the amendment introduced in the Finance Act, 1988.