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2011 (7) TMI 1158 - AT - Income TaxDeemed dividend addition - Addition of cash in hand in excess of ₹ 50,000/- as asset u/s. 2(ea)(vi) - If cash in hand pertains to business being a business asset which is productive asset - Assessee’s contention is that this is a business asset and does not fall under provision of section 2(ea)(vi) as that provision applies to cash in hand in the individual form and not to business asset that belong to proprietary concern of the assessee - HELD THAT:- We find that cash in hand in excess of ₹ 50,000/- in hands of assessee in individual status forms part of asset u/s. 2(ea)(vi). There is no ambiguity in holding so, because as per clause (vi) of sec. 2(ea) cash in hand in excess of ₹ 50,000/- of individuals and HUFs and in the case of other persons any amount not recorded in the books of account are to be treated as asset for the purpose of wealth tax. As per Chelliah Committee report, Finance Act, 1992 and CBDT Circular, it was made clear that only non-productive assets are to be brought under the ambit of Wealth Tax whereas the productive assets are to be excluded from it. There is hardly any scope to account for non-productive cash in the account of the business being carried out as proprietor. The assessee's issue is covered against assessee by the decision of Hon’ble Kerala High Court in the case of COMMISSIONER OF WEALTH-TAX VERSUS SMT. KR. USHASREE (AND OTHER CONNECTED APPEALS) [2009 (7) TMI 834 - KERALA HIGH COURT], where it was held that there is nothing that stops the assessee from utilizing 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 assessee that cash in hand of businessmen should be treated as productive asset also is meaningless. We respectfully follow this decision - Decision against Assessee. Cash in hand generated out of cash sales - Covered u/s 2(ea)(vi) or not? - Alternative contention made that Assessing Officer has not verified the generation of cash in hand which is out of sales made and qua that cash in hand should be treated for business purposes - HELD THAT:- We are with the assessee and incase this cash in hand is generated out of cash sales , it can be stated that this is out of business asset and this business asset is not covered by provision of section 2(ea)(vi) of the Act. Accordingly, this needs verification at the end of the Assessing Officer. Appeal of the assessee is set aside to the file of AO in term of the above - Decision in favour of Assessee.
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