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TMI Blog1992 (7) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and in the circumstances of the case, the Tribunal was right in law in holding that Rs. 5,13,566 and Rs. 5,88,138 could not be assessed to the wealth-tax under sub-section (3) of section 40 of the Finance Act, 1983, in the assessment years 1984-85 and 1985-86, respectively ?" The facts leading to this reference are that the assessee, Messrs. Champa Properties Limited, were assessable to tax for the assessment years 1984-85 and 1985-86 under section 40 of the Finance Act, 1983. The assessee, on the valuation dates, owned a house property at 36A, Shakespeare Sarani, Calcutta, and the value of the above property was to be assessed under the above section. The Assessing Officer determined the value of the house property on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at between the assessee and the lessees to share the higher receivable rent. The lessees under the agreements permitted the assessee to let out the house property at a higher rent subject to payment of Rs. 2,000 per month to each of the lessees. On account of the above, a sum of Rs. 72,000 payable to the lessees was deducted from the gross receivable rent while declaring income of the house property in question. The Assessing Officer under the Income-tax Act, 1961, treated Rs. 7.2,000 as 'application of income" and, therefore, not deductible in determining the annual letting value of the property under sections 22 and 23 of the Income-tax Act. However, on appeal, the Tribunal, in the assessee's case for the assessment years 1982-83 and 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have been available if the liability to tax had been discharged. But the undischarged liabilities towards municipal taxes could not be treated as a debt secured on one or more assets taxable under clause (viii) of sub-section (3) of section 40 of the Finance Act, 1983. It accordingly held that the assets mentioned by the Assessing Officer like advances to parties, shares or deposits in banks, etc., were clearly not covered by clauses (i) to (vi) of the aforesaid sub-section (3). The Tribunal, accordingly, held that one of the clauses (i) to (viii) was applicable to the facts of the case and, therefore, the addition made by the Assessing Officer was unjustified. The addition was rightly deleted by the Commissioner of Wealth-tax (Appeals). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining vacant possession of the building in order to fetch higher rental income from the tenant, i.e., the Department of Rehabilitation Branch Secretariat, Government of India. The agreement dated June 15, 1971, which the assessee entered into with each of the three lessees has not been found sham or ingenuine by the authorities below. That being so, we hold that the Income-tax Officer was not justified in including Rs. 72,000 to the assessee's house property income as, in our opinion, the said sum did not form part of the assessee's income by virtue of the agreements entered into by the assessee with each of the three lessees dated June 15, 1971. We, accordingly, uphold the Commissioner of Income-tax (Appeals)'s order for each of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereto, other than building or part thereof used by the assessee as factory, godown, warehouse, hotel or office for the purposes of its business or as residential accommodation for its employees whose income (exclusive of the value of all benefits or amenities not provided for by way of monetary payment) chargeable under the head "Salaries" does not exceed Rs. 18,000 or as a hospital, creche, school, canteen, library, recreational centre, shelter, rest room or lunch room mainly for the welfare of such employees and the land appurtenant thereto ; (vii) motor cars ; and (viii) any other asset which is acquired or represented by a debt secured on any one or more of the assets referred to in clauses (i) to clause(vii) above. To illustrate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears that the Wealth-tax Officer made addition under clause (viii) of sub-section (3) which is as under : " any other asset which is acquired or represented by a debt secured on any one or more of the assets referred to in clause (i) to clause (vii)." Thus, provision for undischarged liabilities towards municipal taxes was treated as a debt secured on one or more assets referred to in clauses (i) to (vii). But the assets mentioned by the Wealth-tax Officer like advances to parties, shares or deposits in banks are clearly not covered by clauses (i) to (vii) of sub-section (3). That apart, provision for unpaid disputed liability cannot be treated as a debt secured on any asset of the company. Municipal liability was admitted to be a debt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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