9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2009 (1) TMI 430 - HC - Wealth-taxAmount deposited under compulsory Deposit Scheme- . Whether on the facts and circumstances of the case, the Tri bunal was right in law in holding that the amount of Rs. 1,99,750 under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974, constitute an asset under section 2(e) of the Wealth-tax Act, and, therefore, includible in the net wealth of the assessee, for the assessment year 1980-81? Held that- That apart, in the case of a compulsory deposit, unlike an annuity the amount invested becomes a part of the capital and under the scheme, a fixed proportion of this vary capital was to be repaid. Hence, the amount deposited under the Compulsory Deposit Scheme is an asset includible in net wealth. 2. Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that the amount of Rs. 2,76,449 representing income-tax refund likely to be due on the basis of the returns filed, form part of the taxable asset under section 2(e) of the Wealth- tax Act on the valuation date? Held that- the refund which is merely claimed but not assessed has unascertainable value on the date of valuation and cannot form a part of the taxable asset under section 2(e) of the Wealth tax Act. 3. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that while applying the provisions of rule 1BB for valuing the self-occupied property, municipal ratable value has to be adopted instead of standard rent? Held that- while applying the provisions of Rule 1BB of the Wealth tax Rules, 1957, for valuing self occupied property, the municipal rateable value with addition of statutory deductions, if any be adopted instead of standard rent, for arriving at the gross maintainable rent.
Issues Involved:
1. Whether the amount under the Compulsory Deposit Scheme constitutes an asset under section 2(e) of the Wealth-tax Act. 2. Whether the amount representing income-tax refund likely to be due forms part of the taxable asset under section 2(e) of the Wealth-tax Act on the valuation date. 3. Whether municipal ratable value should be adopted instead of standard rent while applying the provisions of rule 1BB for valuing self-occupied property. Detailed Analysis: Issue 1: Compulsory Deposit Scheme as an Asset The first issue concerns whether the amount of Rs. 1,99,750 under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974, constitutes an asset under section 2(e) of the Wealth-tax Act, 1957. The court examined whether such deposits could be considered an annuity exempted under section 2(e)(2)(ii). The court referenced previous judgments, notably CWT v. Master Asutosh K. Mahadevia and CWT v. Vidur V. Patel, which held that such deposits are part of the assessable assets. The court disagreed with the Allahabad High Court's view in Udai Chand Jain v. CIT, which considered these deposits as annuities. Instead, it favored the Calcutta High Court's reasoning in Smt. Sunanda Devi Singhania v. CWT, which stated that these deposits do not qualify as annuities because the repayment amounts are not fixed and can vary due to interest rate changes. Consequently, the court affirmed that the deposits under the Compulsory Deposit Scheme are assets under section 2(e) of the Wealth-tax Act, ruling against the assessee. Issue 2: Income-Tax Refund as a Taxable Asset The second issue addressed whether the amount of Rs. 2,76,449 representing an income-tax refund likely to be due forms part of the taxable asset under section 2(e) of the Wealth-tax Act on the valuation date. The court clarified that merely claiming a refund in a return does not make it payable to the assessee. The refund amount remains unascertained until the assessment is completed by the Assessing Officer. The court referenced the case of Estate of Late Gen. Sir Shankar S. S. J. B. Rana v. CED, which held that an income-tax refund receivable after the deceased's death was not includible in the estate. Additionally, the court cited CWT v. Arvindbhai Chinubhai and CIT v. Rangnath Bangur, which supported the view that an unassessed refund claim is not an ascertainable asset. Thus, the court ruled that the claimed but unassessed refund cannot form part of the taxable asset, deciding in favor of the assessee. Issue 3: Valuation of Self-Occupied Property The third issue involved the method for valuing self-occupied property under rule 1BB of the Wealth-tax Rules, specifically whether to use municipal ratable value instead of standard rent. The court noted that the gross maintainable rent should be the sum for which the house might reasonably be expected to let from year to year. It highlighted that municipal ratable value is also calculated based on the reasonable rent the property may fetch, as per various municipal laws like the Maharashtra Municipal Councils Act and the Bombay Municipal Corporation Act. The court referenced judgments, including CIT v. Prabhabati Bansali and M. V. Sonavala v. CIT, which supported using municipal ratable value for property valuation. The court emphasized that the reasonable rent for municipal ratable value and the gross maintainable rent for wealth-tax purposes are conceptually similar. Therefore, it ruled that municipal ratable value with statutory deductions, if any, may be adopted instead of standard rent for valuing self-occupied property under rule 1BB, answering in favor of this method. Conclusion: The wealth-tax reference was disposed of with the following conclusions: 1. The amount under the Compulsory Deposit Scheme is an asset under section 2(e) of the Wealth-tax Act. 2. The income-tax refund claimed but not assessed is not a taxable asset under section 2(e) on the valuation date. 3. Municipal ratable value with statutory deductions may be used instead of standard rent for valuing self-occupied property under rule 1BB. No order as to costs was made.
|
