TMI Blog2014 (10) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... e is not a debt owed u/s.2(m). The assessee’s claim is thus not maintainable either on facts or in law. - Decided against the assessee. - WTA No. 31/Mum/2013, WTA No. 12/Mum/2014 - - - Dated:- 17-9-2014 - Shri Sanjay Arora, AM And Shri Amit Shukla, JM,JJ. For the Petitioner : Dr. K. Shivaram Shri Rahul K. Hakani For the Respondent : Shri N. Sathya Moorthy ORDER Per Sanjay Arora, A. M.: This is a set of cross Appeals, i.e., by the Assessee and the Revenue, arising out of separate orders by the Commissioner of Wealth Tax (Appeals)-18, Mumbai ( CWT(A) for short), partly allowing the assessee s appeal contesting its assessment u/s.16(5) r/w s. 17 of the Wealth Tax Act, 1957 ( the Act hereinafter) for the assessment year (A.Y.) 2009-10 vide order dated 29.12.2011 and rejecting the Assessing Officer s (A.O.) rectification u/s.35 (also refer para 3 of this order). 2. The only issue arising in the instant case is the value at which the assessee s immovable property in the form of a flat, admittedly an asset u/s. 2(ea) of the Act, is to be assessed to tax in view of the assessee s claim for ₹ 212 lacs as debt owed there-against. 3. The con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utset, we may though clarify that the assessee, both per its grounds assumed as well as its arguments before us, restricts its claim qua loans to ₹ 212 lacs, i.e., as against ₹ 273.75 lacs claimed per its return of wealth (PB-1, pgs. 1-3). The same is from two parties: Shri Manoharlal Tandon : ₹ 27 lacs (PB-1 pgs. 4, 13, 27) Shri Jaydeep Tandon : ₹ 185 lacs (PB-1, pgs. 4, 13, 28) We proceed party-wise, in seriatim. Shri Manoharlal Tandon (Rs.27 lacs) 4.2 As per the loan account, as appearing in the books of the lender, ₹ 90 lacs was paid to the assessee on 12.06.2008 (PB-1, pg. 27). The same stands utilized in payment of purchase cost to one of the co-owners, of which the lender is one, on 18.06.2008 (PB-1, pg. 16). The same is clearly for the purpose of the flat (asset). There are two repayments, i.e., on 08.09.2008 (Rs.28 lacs) and 24.03.2009 (Rs.30 lacs), so that the outstanding balance in the loan amount as at 31.03.2009 is ₹ 27 lacs , at which sum the same is being claimed by the assessee. The repayments are not in dispute. The only other entries in the account are for credit and payment of ₹ 62 lacs to the assessee (on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty would substitute the old loan, so that the interest thereon is also deductible. Security deposit, it is submitted, is deductible as a debt owed u/s.2(m) in view of the decision by the hon ble jurisdictional high court in the case of Miss Deanna J. Jeejeebhoy vs. WTO [2011] 330 ITR 149 (Bom). The loan assumed to repay the same would thus also be eligible for being so considered. We have carefully perused the judgment in Miss Deanna J. Jeejeebhoy (supra), which is binding on us. The dispute in that case, as apparent from the questions raised before the hon ble court, was whether the debt owed in relation to a property chargeable to Wealth Tax could be reduced on the basis that a part thereof stood invested in an asset exempt from wealth-tax. Both the parties proceeded on the footing that the security deposit was a debt owed u/s.2(m), so that the point in issue was the extent to which it was allowable in-as-much as the assessee had admittedly invested a part thereof in tax-exempt bonds, to which extent therefore deduction had been denied by the Revenue. The hon ble court clarified that once it was accepted that the security deposit taken was a debt in respect of a property ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, however, is towards exploitation of the property for gain , i.e., is essentially an agreement for the user of the property, so that the sum realized under the said agreement by way of deposit may not qualify to be considered as a debt owed in relation to an asset u/s. 2(m) in-as-much as it has no bearing or relation with the acquisition, holding or even the valuation of the asset. On the contrary, valuation models, as indeed under the relevant Rules itself (Schedule III to the Act, r. 5), recognize the transfer of a benefit to the owner (by the tenant) thus, providing for a percentage (15%) of such interest-free deposit as a part of the gross maintainable rent , i.e., with reference to which valuation is made, further limiting the addition to the differential interest where the deposit is interest bearing. Continuing further, we may also examine the validity of the assessee s claim on facts, i.e., presuming that a security deposit is a debt owed u/s. 2(m). We, accordingly, proceed to examine if the said decision is applicable under the facts and circumstances of the case. Without doubt, the loan to the extent of ₹ 120 lacs, being utilized in repayment of the securi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing as on the valuation date could be considered as a debt and, thus, a debt owed u/s.2(m), no deduction under the said provision was admissible; the entire loan of ₹ 58 lacs from the two parties afore-said, i.e., Shri Manoharlal Tandon (Rs.28 lacs) and Shri Jaydeep Tandon (Rs.30 lacs), as allowed in assessment vide order dated 29.12.2011, stood paid on 08.09.2008, i.e., prior to 31.03.2009, so that it did subsist as on that date and, accordingly, there had occurred a mistake apparent from the record in allowing deduction u/s.2(m) at ₹ 58 lacs qua loan from the said two parties. The ld. CWT(A), on the basis of the assessee s balance-sheet as on 31.03.2009, reflecting the outstanding to Shri Manoharlal Tandon and Shri Jaydeep Tandon at ₹ 27 lacs and ₹ 185 lacs respectively as at the close of the year, confirmed his order dated 17.09.2013, so that no rectification u/s.35 was called for, vide his order dated 06.02.2014 supra. Aggrieved, the Revenue is in appeal. 6. We have heard the parties, and perused the material on record. In view of our detailed findings at paras 4.2 and 4.3 (supra), based on the assessee s account as appearing in the books of the credi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
