9911796707
TMI Blog2006 (12) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... bringing to tax the written down value of the motor cars as per books of account of the appellant as opposed to the appellant' s contentions that their written down value as per income-tax records ought to be considered." 2. Apropos ground No. 1, the facts were discussed by the Wealth-tax Officer on page 3 of the assessment order passed under section 16(3) read with section 17 dated March 31, 2004, the assessment year 1999-2000. It was found from the wealth-tax statement filed along with the return that the assessee has claimed deduction of ₹ 1,09,15,787 on account of tied-up loans from the employees from the value of vehicles. In compliance with show-cause notice, the response of the assessee was that the tied-up loans from vehicles represented the amount of security deposit and the amount collected from the employees in respect of vehicles used by those employees. Those deposits and amount collected were considered as a debt owed by the company against the respective vehicle. The assessee has produced copy of the scheme of vehicle loans and conveyance reimbursement, as stated by the Assessing Officer. On going through this scheme, the observation of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution. Rest of the cost of the vehicle is initially paid by the company. The balance cost of the vehicle, after adjusting the initial contribution by the employee, is recovered from the employees, along with applicable interest, in sixty monthly instalments. To provide a security to the company, the vehicle is to remain in the name of the company till the loan is completely repaid. All applicable taxes and rates are to be paid by the allottee (employees) of the vehicle, subject to reimbursement of expenses according to the scheme. In the event of an employee leaving the services without completing the vehicle scheme, that is, before completion of the sixty months period, the employee has to necessarily buy the vehicle from the company after paying the balance amount." 4. The learned Commissioner of Wealth-tax (Appeals) has also reproduced the observation of the Assessing Officer in this regard, however, concluded that in the assessee' s own case for the assessment year 1998-99, this issue had been decided in favour of the Revenue by his predecessor. The Commissioner of Wealth-tax (Appeals) has simply followed that decision without any further discussion on the subject. At ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehicle loan was laid down, according to which, employees will have to pay a certain percentage of the cost of the vehicle as initial contribution and the loan would be to the extent of the remaining amount. Sub-clause (b) of clause (2) of the said policy provides that during a period of 5 years, the balance value + interest would be recovered from the employee' s salary in 60 monthly instalments. Further, sub-clause (d) has categorically mentioned that the vehicle will remain in the name of the company i.e., the assessee till the loan is completely repaid. The learned authorised representative has also drawn our attention on an another clause which has covered a condition of " pre-mature withdrawal from vehicle scheme on separation" . This clause has provided that in case of a separation without completing the scheme, a wear and tear margin at the rate of 9.5 per cent. per annum will be admissible. Interest at the vehicle scheme rate will be charged on the loan amount. The learned authorised representative has clarified that the term " separation" means premature retirement or leaving the service of the company. On the basis of this factual background, we h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Smt. Rati M. Fyzee [2002] 82 ITD 548 wherein it was opined (headnote) " It is not necessary that the debt should have a direct or immediate relation with the concerned asset ; the relationship can be a little remote or even indirect, having regard to the broad language used by the provision. It should not, however, be illusory or tenuous. There must be some appreciable or intelligible nexus or relation between the debt and the asset in question and the question whether there is any such relation between the debt and the asset concerned is a question of fact to be decided after an examination of the facts and circumstances of each case." Unquote. The facts of the case have also established that such relationship was undoubtedly established in the instant case. It is not the case of the Revenue that the repayment terms had no nexus with the asset i.e., the car. We have also examined the relevant terms and clauses through which the accepted position is that the employees have to contribute in instalment towards the cost of the said asset. Almost identical view has also been expressed in an another decision by the Income-tax Appellate Tribunal, Kolkata Bench in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t value of the vehicle should not be adopted as per the books of account instead of written down value as per the Income-tax Act. The submission of the assessee was that the written down value as per the Income-tax Act should be considered for the purpose of computing wealth-tax. In the opinion of the Assessing Officer, the written down value as per the books of accounts of the assessee represented the true market value of the vehicles. In his opinion, for income-tax purposes, the written down value is in respect of the block of assets and did not represent the true market value of the block. So, the Assessing Officer has adopted the value of those vehicles as per the books of account of the assessee at ₹ 5,99,00,505. 9. When this issue has come up in appeal the argument of the assessee was that the Income-tax Act and the Wealth-tax Acts form an integrated code of direct taxes and the values with reference to which depreciation has been allowed under the Income-tax Act should be accepted for the purpose of the Wealth-tax Act. However, the first appellate authority has opined that the rates of depreciation provided under the Income-tax Rules do not necessarily reflect the nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [1997] 60 ITD 657 (Mumbai) as follows (headnote) : " Rule 14 of Schedule III applies only in the case when a global valuation of the assets of the business as a whole are to be computed, whereas in the instant case only the motor cars were subjected to wealth-tax and were under valuation and not the business of the assessee as a whole. Therefore, this rule per se had no application to the facts and circumstances of the case. Clause (a) to rule 14(2) no doubt provides that value of the asset as disclosed in the balance- sheet shall be taken to be written down value in the case of an asset on which depreciation is admissible, but this sub-clause is subject to clause (b). This clause provides that if the value of any such asset is determined in accordance with the provisions of this Schedule as applicable to that particular asset or if there are no such provisions, as determined in accordance with rule 20, exceeds the value as deter mined under clause (a) by more than 20 per cent., then the higher value is to be taken as the value of the asset. The assessee' s conten tion that rule 14(2)(a) itself is a rule for estimating value of the motor car and it was the written d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly taken as the basis for determining the market value. However, looking to the fact that the insurance company would also take other things into consideration in arriving at a particular value for the purposes of insurance, market value of motor cars could be reasonably estimated at 80 per cent. of their insurance value." 11. So, in the interest of justice, we refer this issue back to the stage of the Assessing Officer to redetermine the value of the vehicles as laid down in the above cited case. Resultantly, this ground of the assessee may be treated as partly allowed for both the years that too only for statistical purposes. 12. In the result, these appeals are partly allowed. 13. The judgment pronounced on December 21, 2006. 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