2015 (11) TMI 1189 - AT - Wealth-tax

Violation of the provision of the Rule 46A of IT Rule, 1962 - Non confrontation of contract notes evidencing sale of shares by the Assessee through a broker at Mumbai - Held that - conclusions of the CWT(A) are not based only on the evidence regarding share transactions carried out by the Assessee at Mumbai. The payment of salary to Mr.Mukherjee and his correspondence and reports on various business information obtained from Mumbai and sent to Kolkata have not been disputed by the WTO. The payment of conveyance expenses and salary to Mr.Mukherjee showed that he rendered services to the Assessee at Mumbai. Mr.Mukherjee was using the Mumbai property both for his residence as well as for business purpose of the Assessee. These facts were not disputed by the WTO. The absence of trade license considering the nature of services rendered by Mr.Mukherjee in our view will not be very material. - The fact that the land is described as Sali land in the sale deed which was already available on record is not disputed by the Revenue. The evidence of payment of land revenue only supports the document already on record. Besides the above, the WTO did not agree with the stand of the Assessee mainly on the basis that in the past the land in question was considered as Asset . In our view therefore the conclusions of the CWT(A) therefore cannot be said to be erroneous or based only on the evidence of payment of land revenue to the Government. - Decided against Revenue.

Summary

Issues:
1. Whether the property in Mumbai owned by the company should be considered as an asset for the purpose of levy of wealth tax.
2. Whether the land at Mumbai Road, Howrah, W.B should be considered as an asset for determining the net wealth of the Assessee.

Issue 1: Property in Mumbai as an Asset for Wealth Tax:

The case involved appeals by the Revenue against a common order of the Commissioner of Wealth Tax (Appeals) regarding the inclusion of a flat in Mumbai as an asset for wealth tax purposes. The Assessee, a company, argued that the property was used for business activities and hence fell under an exclusion clause of the Wealth-tax Act. The Wealth Tax Officer (WTO) disagreed, stating lack of evidence of actual business transactions and absence of a trade license. However, the Commissioner of Wealth Tax (Appeals) held in favor of the Assessee, considering evidence of business activities conducted through a manager in Mumbai. The Tribunal upheld the CWT(A)'s decision, emphasizing the services rendered by the manager and the property's use for business purposes, dismissing the Revenue's appeals.

Issue 2: Land at Mumbai Road, Howrah, W.B as an Asset for Wealth Tax:

The second issue revolved around the exclusion of the value of land at Mumbai Road, Howrah, W.B as an asset for wealth tax assessment. The Assessee had consistently declared this land as an asset in previous returns but omitted it in subsequent years, claiming it was not urban land. The WTO rejected this claim, but the CWT(A) ruled in favor of the Assessee after examining the sale deed and determining the land was not urban land. The Revenue's grievance was that certain documentary evidence was not presented to the WTO by the CWT(A). However, the Tribunal found no fault in the CWT(A)'s decision, noting that the evidence supported the existing records, and the past declaration of the land as an asset did not preclude its reevaluation. Consequently, the Tribunal dismissed the Revenue's appeal on this issue as well.

In conclusion, the Tribunal upheld the decisions of the Commissioner of Wealth Tax (Appeals) in both issues, ruling in favor of the Assessee and dismissing the Revenue's appeals.