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TMI Blog2017 (11) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, any cash in hand in excess of ₹ 50,000 is an asset. It is irrelevant whether the individual is doing business or not. The argument of the assessee that cash in hand is recorded in the books of account of the business of assessee is a productive asset, therefore it cannot be chargeable to wealth-tax, has been examined by the Hon’ble Kerala High Court in the case of CWT v. Smt K.R. Ushasree (2009 (7) TMI 834 - Kerala High Court) in which held that there is nothing that stops the assessee from utilizing the cash in hand which may be the business asset on the valuation date for any non-productive purpose on the next day. Therefore the argument of assessee that cash in hand of businessmen should be treated as productive asset also is meaningless. - Decided against assessee. - WTA Nos. 7 to 11/Bang/2016 - - - Dated:- 27-9-2017 - Shri Sunil Kumar Yadav, Judicial Member And Shri A. K. Garodia, Accountant Member Appellant by : Shri R. Ramakrishnan, CA Respondent by : Shri Sanjay Kumar, CIT (DR) ORDER Per Bench These appeals are preferred by the assessee against the order of CIT(Appeals) on common grounds, except the quantum of additions made therein. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of section 2 (ea) of the Act even in the case of individual and HUF. In our opinion, the cash in hand duly recorded in the books of account by the assesses who are the individuals and HUFs are the commercial assets and hence, productive assets . 4. The learned Commissioner of Income Tax (Appeals) is not justified the contention of the appellant that so far as businessmen are concerned, cash in hand is a business asset and being productive it is not to be treated as asset within the meaning of the section 2 (ea) of Wealth Tax Act 1957. 5. On the facts and in the circumstances of the case, the order of the learned Commissioner of Income Tax (Appeals) is opposed to the principles of natural justice and accordingly liable to be cancelled or annulled. 6. On the facts the learned Commissioner of Income Tax (Appeals) ought to have adjudicated the grounds raised before him and dispose of the appeal on merits. 7. For these and other grounds that may be urged at the time of hearing of the appeal, the appellant prays that the appeal may be allowed. 2. The facts in brief borne out from the record are that during the course of assessment proceedings, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Hon ble Kerala High Court in the aforesaid judgment in which it was categorically held that cash in hand in excess of ₹ 50,000 held by the individuals HUF is an asset for the purpose of Wealth-tax Act. 6. Having carefully examined the orders of lower authorities in the light of rival submissions, we find that the assessee is an individual and filed its return of income in the capacity of individual, though he has been doing his own business. Provisions of section 2(ea)(vi) of the Act clearly states that cash in hand in excess of ₹ 50,000 of individuals HUF is an asset and in the case of others, any amount not recorded in the books of account is an asset. For the sake of reference, we extract the provisions of section 2(ea)(vi) of the Act as under:- 2(ea) assets , in relation to the assessment year commencing on the 1st day of April, 1993, or any subsequent assessment year, means- .. (vi) cash in hand, in excess of fifty thousand rupees, of individuals and Hindu undivided families and in the case of other persons any amount not recorded in the books of account. 7. We do not find any provision in the Act which says that cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making its administration enormously complicated. The valuation of certain assets such as shares also presents problems, since very high market values reflecting speculative activity can lead to a heavy burden on shareholders who are long-term investors. There is also no distinction at present between productive and nonproductive assets. The Chelliah Committee has suggested that in order to encourage the taxpayers to invest in productive assets such as shares, securities, bonds, bank deposits, etc., and also to promote investments through mutual funds, these financial assets should be exempted from wealth-tax. Wealth-tax should be levied on individuals, Hindu undivided families and all companies only in respect of non-productive assets such as residential houses, including farm houses and urban land, jewellery ; bullion, motor cars, planes, boats and yachts which are not used for commercial purposes. The Committee has further suggested that such tax should be at the rate of one per cent. with a basic exemption of ₹ 15 lakhs. I propose to accept the recommendation and I hope this change will encourage investments in productive assets and discourage investments in ostentatious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme of the Act, prior to and after the amendment before proceeding to consider the meaning of the section. The Act provides for wealth-tax on three categories of assessees, namely, individuals, HUFs and companies. Asset as defined under section 2(e) of the Act, which stood in force until March 31, 1992 included property of every description, movable or immovable, except the items excluded in the sub-clauses provided therein. In other words, property of every description other than those which were specifically excluded were subject to wealth-tax. However, after the amendment, Parliament based on the recommendations of the Chelliah Committee, identified non-productive assets and classified the same under the new definition clause (ea) introduced to section 2 providing for wealth-tax only on such of the assets enumerated in the sub-clauses provided under the said section with effect from April 1, 1992. In other words, while the provisions of the Wealth-tax Act, prior to the amendment by the Finance Act, 1992, described and named items of assets excluded from tax, after the amendment, the assets which are subject to wealth-tax are specifically identified and earmarked by Parliamen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her words, once the statute identified non-productive assets for the purpose of assessment in the definition clause, there is no scope for any adjudication as to whether any such asset is productive warranting exclusion. In fact, it is pertinent to note that cash in the bank account of the assessee is excluded because such cash is used by the bank for business purposes like advancing loans to other parties, and so much so cash maintained in the bank accounts by the assessees is excluded from the definition of assets . So much so, in our view, Parliament deliberately brought to tax cash in hand in the case of individuals and HUFs for the purpose of levy of wealth-tax in excess of the limit of ₹ 50,000 by treating it as non-productive asset. Though not relevant, we are constrained to observe that there is nothing that stops the assessees from utilising the cash in hand which may be business asset on the valuation date for any non-productive purpose on the next day. Therefore the argument of the assessees that cash in hand of businessmen should be treated as productive asset also is meaningless. Except narrating the recommendations of the Chelliah Committee, neither the Finance ..... 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