9911796707
TMI Blog1983 (11) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... e valuation of mines as per the statutory provision, the assessee has to restore the mines to its original condition as far as possible and this liability has not been reckoned and such liability as estimated may be allowed in computing the value of the mines and the net wealth." Shri K.R. Prasad the learned counsel for the assessee, seeks to raise the additional ground by invoking the power of the Tribunal in terms of rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963. His plea is that the additional ground deserves to be admitted for adjudication since the ground involves a point of law and does not require any investigation of facts. Shri K.A. Sathe, on behalf of the department, strongly contests this claim and admission of the additional ground. He contends that the point was never raised before the WTO and, therefore, did not constitute the subject-matter of assessment which could not, therefore, be and was not adjudicated upon by the Commissioner (Appeals). As such, it cannot constitute the subject-matter of appeal before the Tribunal and the Tribunal cannot acquire jurisdiction to admit such a ground in the circumstances. He relies for his contentions in the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative in the case of Gurjargravures (P.) Ltd., the facts were that the claim for development rebate was never raised before the ITO and there was no material on the record supporting the claim. It was on these facts that their Lordships of the Supreme Court held that as neither was any claim made before the ITO nor was there any material in support thereof, admission of the additional ground raised before the Tribunal making the claim was erroneous. Their Lordships were pleased to observe in this very ruling that they were not called upon to consider a case where the assessee failed to make a claim though there was evidence on record to support it. Obviously, therefore, this case is clearly distinguishable on the facts, from the assessee's case. In the case of Ugar Sugar Works Ltd., the facts were that a claim for allowance of development rebate was made before the ITO but was rejected by him. The assessee did not raise a ground of appeal against this disallowance before the AAC nor was any such ground raised even in the course of the arguments before that authority. The claim was sought to be raised by way of an additional ground before the Tribunal. It was on these facts tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases for a period of 20 years with effect from 15-1-1966. Thus, the assessee stakes its claim for allowance of the liability for restoration of the lands which were demised to it under these leases in terms of the mining concessions which it acquired from the Portuguese Government for the years 1964-65 and 1965-66 under the said concessions and for the subsequent years on the leases as they stood modified under the Indian Act as stated above with effect from 15-1-1966. We may note here that the relevant valuation date is the 31st March preceding each assessment year. In order to appreciate his contention and to bring out the legitimacy of his claim on behalf of the assessee, Shri K.R. Prasad invites our pointed attention to the provisions of the lease deeds governing the mining leases under the Indian Act. It is submitted by him that these lease deeds were required in terms of the Indian Act to be framed in accordance with the Model Form of lease deed provided under the said Act, marked Form K Model Form of Mining Lease as provided in rule 31 of the rules framed under that Act. His case is founded upon the terms of paragraph 4 of Part V of the Schedule annexed to the lease deed whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which had been fully exploited and/or abandoned for any other reason but that this condition would not apply for that portion of the land where further exploitation was possible. This interpretation, according to the Tribunal, in the aforesaid order would follow from a harmonious reading of the provisions contained in Part V and Part VII, since the relevant paragraph of Part VII (paragraph 20 in the assessee's case) required the lessee on expiry, of the term of the lease or its earlier termination to deliver unto the Government such of the mines as were fit for further working of the minerals. The Tribunal concluded on the interpretation which it placed on these provisions of the lease agreement that while the liability to restore the land to its original condition was squarely fixed on the lessee by the terms and conditions of the agreement, such liability did not extend to the entire area of operations but extended only to those parts which were fully exploited or were abandoned for other reasons. Holding thus, the Tribunal accepted the assessee's claim that it was entitled to deduction of an appropriate provision made by it for restoring the lands to its original condition as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst him that no liability accrued as claimed under the lease agreements, such a liability was laid upon the assessee in law by virtue of section 108 of the Transfer of Property Act, 1882. 5. Shri Sathe, the learned departmental representative, counters the assessee's claim on several grounds. In the first instance, he contends that on a proper reading of the lease deeds under the Indian Act, no liability can be said to have been laid upon the assessee to restore the entire land occupied or used by the assessee under the leases to its original condition. Analysing the structure of the lease deed, he argues that the very placement of the so called liability in Part V of the deed which determines the rents and royalties payable by the lessee, shows that there was no liability suffered by the assessee for the restoration of the land used and occupied to its original condition. Had there been any such liability, it would have found its natural place in the agreement in Part III which enumerates the restrictions and conditions subject to which the lessee was to exercise its lease rights listed in Part II. Part III is completely silent as to any such liability of the lessee as claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lease agreements under the Indian Act for the assessment years 1966-67 to 1976-77 is concerned, we do not accept the interpretation sought to be given to clause 4 of Part V by the departmental representative that the obligation laid upon the assessee for restoration was limited only to such portion of the lands demised to it under the leases used or occupied for stacking and heaping, etc., of machinery, equipment and ore dug out. No such limitation, in our view, can be read in that clause. The real question, however, for decision in this case is whether this obligation or liability amounted to a ' debt ' within the meaning of section 2(m) of the Wealth-tax Act, 1957 (' the Act ') for it is only if that condition is satisfied that the assessee would be entitled to its deduction in the computation of its net wealth for each of the years. What is, therefore, relevant to be determined is whether the assessee's claim amounts to a debt due on each of the valuation dates under consideration. Now it is clear from the very order of the Tribunal on which the assessee relies that its liability for restoration of the land to its original condition is only in respect of that portion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of taxable profits for the relevant year under the Income-tax Act. The same considerations cannot, however, apply to a case under the Wealth-tax Act, where the liability to pay wealth-tax is charged upon the net wealth of an assessee." As for the assessee's reliance on section 108 of the Transfer of Property Act, it is, in our view, quite misplaced. This is made clear by the very opening words of section 108 to the effect " In the absence of a contract or local usage to the contrary. In the assessee's case admittedly the rights and liabilities were spelt out under the contracts or lease agreements. It is trite law that an express covenant always overrides an implied covenant, i.e., the covenant implied by this section. The claim, therefore, raised by the assessee on the strength of the lease agreements under the Indian Act fails. As regards the claim for the two years 1964-65 and 1965-66 is concerned, we fail to read in clauses 9 and 12 of article 98 relied upon by the assessee anything in the nature of a debt due against the assessee on the relevant valuation dates. These clauses enjoined upon the lessee to keep the works in the mining area in a safe condition and take measu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R.A. Muthukrishna Ammal [1969] 72 ITR 801, came to the conclusion that the contention as to the leases in question being precarious so as to fall within the protection of item (v) of sub-clause (1) of section 2(e) was unsustainable. The Tribunal's finding was expressed in the following words in paragraph 6 of its order : " . . . sub-rule (iv) of rule 45 of the Mineral Concession Rules says that the State Government shall give notice to the lessee requiring him to pay the royalty if there is default in the payment of royalty and if the payment is still not made within 60 days from the date of receipt of the notice the lease can be terminated. Likewise if there is any breach of the conditions in the lease, the State Government shall give a notice to the lessee to remedy the breach and if that is not done within 60 days, the lease can be terminated. The power to terminate the lease is not absolute and that power is hedged by certain restrictions. We are, therefore, unable to come to the conclusion that the mining lease was precarious as pressed on behalf of the appellant. The fact that the lessee has got the right to terminate the lease by giving 12 months' notice is of no consequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y an order, make premature termination of a mining lease in respect of any mine or mineral and grant a fresh lease in respect of such mineral in favour of such Government company or corporation owned or controlled by Government as it may think fit." Shri K.R. Prasad contends that on the terms of section 4A the inference to be drawn is as to the unfettered power of the Central Government or of the State Government in respect of minor minerals, to make a premature termination of the mining leases and that is what rendered the assessee's mining leases under consideration precarious. We do not, however, find substance in this contention. It cannot be held on a proper reading of section 4A that the power of termination held by the Government in terms thereof was absolute and unconditional. Section 4A in fact emphatically provides such a limitation to the exercise of that power. What it lays down is that the power of premature termination was to be exercised by the Government where it is of opinion that it is expedient in the interest of regulation of mines and development so to do. This limitation certainly distinguished the power exercisable by the Government in terms of section 4A f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid, the jetty purchased out of the gifted amounts and its income could not be included in the assessments of the HUF and secondly, this contention pertains only to the assessment years 1975-76 and 1976-77, since more than 12 years had elapsed by 31-3-1975, the valuation date for the assessment year 1975-76, during which period the gifted properties were in adverse possession, provisions of section 27 of the Limitation Act, 1908 would operate to exclude these amounts from the net wealth of the assessee for these two years. We find no substance in the first contention since the gifts having been found to be invalid and, therefore, non est in the eye of law, any assets or income thereof purchased or acquired from the amounts constituting the invalid gifts would remain the property of the assessee. This contention is, therefore, rejected. As regards the second contention pertaining to the years 1975-76 and 1976-77, Shri Sathe, on behalf of the department, objects to the assessee being allowed to urge this new contention. We, however, do not find merit in Shri Sathe's objection. It has always been the assessee's case before the authorities below that the value of the jetty or income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having had the opportunity to examine and make his representation thereon was unjustified. Besides, it is contended that the Commissioner (Appeals) has not advanced any convincing or acceptable reasons for reducing the valuation made by the departmental valuer. The learned counsel for the assessee relies on the order of the Commissioner (Appeals) in support of the assessee's case. 14. We find force in the contentions raised by the departmental representative. It was certainly appropriate and called for that the Commissioner (Appeals), having admitted the assessee's valuer's report, should have called upon the WTO to examine the same in detail and to make his representation thereon. His failure to do so vitiates his order which for that reason deserves to be set aside. Apart from that, we find that the Commissioner (Appeals) called for explanation from the Valuation Officer of the department in regard to his valuation of the barges. The Valuation Officer replied to this requisition by his letter dated 16-1-1982. In this letter, the departmental Valuation Officer explained the factors which he had taken in to account in making the valuation. The Commissioner (Appeals) found that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of his powers to transfer or sell the property, this was a relevant factor in the computation of the market value of the property which would operate to depress its price. 16. On behalf of the assessee, the learned counsel invites us to consider the provisions of articles 242, 243, 246, 259 and 270 at Mulla's Hindu Law, 14th edition to sustain his proposition that these clogs or fetters, as he terms them, on the karta's power to dispose of the Hindu joint family property must be taken into account for purposes of computing the market value of such property under the Act. In our view, there is no substance whatsoever in the assessee's claim. It appears to us that the contention put forth on behalf of the assessee is on account of a confusion between the owner of the property which is liable to charge under the Act, i.e., the HUF and the powers of the manager or karta of the HUF under Hindu law for disposition and sale of the property. The contention put forth is that inasmuch as the karta can only sell the HUF property or any part thereof for the benefit of the family, this restriction acts as a clog or a fetter for putting the property to sale and that this restrictive fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
