1999 (10) TMI 96 - AT - Wealth-tax

Summary

Issues Involved:
1. Inclusion of the value of land and building in the total wealth of the assessee.
2. Issuance of enhancement notice by the Commissioner of Wealth Tax (Appeals) [CWT(A)].
3. Setting aside of the assessment order by the CWT(A).
4. Determination of the value of assets leased to subsidiary companies.

Issue-wise Detailed Analysis:

1. Inclusion of the Value of Land and Building in the Total Wealth of the Assessee:
The original assessment for the assessment year 1989-90 included the value of the land and building leased to M/s R. Narain Dyeing and Printing Mills (Pvt.) Ltd. The assessee contended that this inclusion was unjustified under clause (vi) of sub-section (3) of section 40 of the Finance Act, 1983, and alternatively argued that the value taken was excessive. The CWT(A) did not decide on this issue but instead set aside the assessment for fresh consideration by the Assessing Officer (AO). The Tribunal noted that the ITAT Delhi Bench 'D' had adjudicated similar grounds for the assessment year 1987-88 in the assessee's favor, suggesting that the same should apply for the assessment year 1989-90.

2. Issuance of Enhancement Notice by the CWT(A):
The CWT(A) issued a show-cause notice for enhancement of the assessee's net wealth based on the discovery that another portion of the building and machinery had been leased to M/s Nishan Embroidery & Knitting Co. Ltd. The assessee argued that since this matter was not on record before the AO, the CWT(A) lacked the authority to enhance the assessment. The CWT(A) eventually dropped the enhancement notice but set aside the assessment for fresh consideration, which the Tribunal found to be fair and just.

3. Setting Aside of the Assessment Order by the CWT(A):
The CWT(A) set aside the assessment order for the AO to consider the inclusion of the value of assets leased to M/s Nishan Embroidery & Knitting Co. Ltd. The Tribunal supported this action, noting that the CWT(A) aimed to ensure proper consideration and verification of the includibility and valuation of these assets. The Tribunal emphasized that the CWT(A)'s decision was based on fairness and justness, given the new facts discovered.

4. Determination of the Value of Assets Leased to Subsidiary Companies:
The AO, in the fresh assessment order dated 30-4-1993, took the value of the land leased to the subsidiary company at Rs. 76,27,500 and the building at Rs. 3,60,000. The AO did not include the value of the asset leased to M/s Nishan Embroidery & Knitting Mills Ltd., considering them business assets. The CWT(A) found this exclusion incorrect, citing precedents that required the inclusion of such leased properties in the total wealth. The Tribunal agreed that the CWT(A) should have issued a notice of enhancement and followed due procedure before directing the inclusion of these assets' value.

Conclusion:
The Tribunal set aside the orders of the CWT(A) for the assessment years 1989-90 and 1990-91, directing the CWT(A) to decide the grounds of appeal afresh in light of the ITAT's order for the assessment year 1987-88. The CWT(A) was also instructed to issue a notice of enhancement and follow the due procedure regarding the inclusion of the value of assets leased to M/s Nishan Embroidery & Knitting Mills Ltd. The appeal for WTA No. 1225/Del./1990 was dismissed, while the other two appeals were allowed for statistical purposes.