TMI Blog2005 (5) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... the company made a reference to Board of Industrial Financial Reconstruction (in short BIFR) under section 15 of the Sick Industrial Companies (Special Provisions) Act in May, 1993. It seems that properties were pledged with financial institutions and banks and some restrictions were imposed by the BIFR for alienation of the properties. These properties consisted of factory buildings and vacant land appurtenant thereto, guest houses with land appurtenant thereto and vacant lands. 4. According to the ld. AR, number of schemes were sanctioned by BIFR from time to time to rehabilitate the company and under such schemes directions were given to the promoters to bring further investments, which promoters failed to bring. In this background, the company ultimately made a proposal to sell some of its immovable properties and bring monies to rehabilitate the company. Such proposal was initially rejected by the BIFR by its order dated 24-2-2003 against which an appeal was filed before the appellate authority, which also confirmed the rejection. Further appeal was filed before the Hon'ble Madras High Court and Hon'ble High Court directed the Industrial Development Bank of India (for short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permissible under any law for the time being in force in the area in which such land is situated. He further submitted that according to sections 48 and 49 of The Tamil Nadu Town Country Planning Act, 1971 wherein it specifically provided that no person other than any State Government or Central Government will erect any building except with the written permission of the appropriate planning authority and in accordance with the conditions. He admitted that some of the lands had already been converted into stock-in-trade and no such permission has been granted by the appropriate authority under the Act. He pointed out that in the Tamil Nadu Town Country Planning Act, 1971, in sections 48 and 49, the term used is "permissible" and not the term "prohibited", which means that such lands cannot be subjected to wealth-tax unless permission has been given by the authorities because permissible would mean that permission is a prerequisite and prohibition would refer to total ban on construction, e.g., in Coastal Regulation Zone. Other detailed submissions were also made in respect of individual properties, which we shall discuss separately while discussing individual properties. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rhaps, this step was taken to save income-tax on capital gains because appreciation in the stock-in-trade on account of properties has been adjusted against the normal business losses. But it also shows that assessee was having clear intention to save such lands and such intention can be found only if there were surplus vacant lands. He submitted that though there is a provision for exemption of stock-in-trade, but this limit was originally fixed at 3 years from the date of acquisition by the Finance Act, 1993 and the limit of 3 years was extended to 5 years by the Finance Act, 1994, w.e.f. 1-4-1995 and it was further extended to 10 years by Finance (No. 2) Act, 1998, w.e.f. 1-4-1999; which means that for the assessment year 1993-94, the limit was only three years and upto assessment year 1998-99 the limit was 5 years. At this juncture, a specific query was posed by the Bench that why lands were converted into stock-in-trade and the ld. counsel of the assessee admitted that the conversion was done with a view to sell these lands, because assessee company was suffering business losses. 7. After considering the rival submissions carefully, we are unable to agree with the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e permission. In that sense, there was no prohibition on construction and it was very much permissible. Had the assessee sought permission, same would have been given as per guidelines of Local Authorities and thus construction was very much possible. Clause (b) of section 2(ea) to the Wealth-tax Act defines "urban land" and excludes only those lands where construction of a building is not permissible under any law and the provisions of the Tamil Nadu Town and Country Planning Act, 1971, relied on by the ld. AR are not of much help because, construction is very much permissible. There may be some controversy in respect of whether such lands can be called as urban lands or not, when some buildings have been constructed on a small plot of land. E.g., in case of Rother House, Bangalore, constructed area is only 611 sq.ft. whereas the plot area is 79,280 sq.ft. Similarly, in case of Boat Club Road, Chennai, the constructed area is only 3,369 sq.ft. whereas the total area of the plot is 63,168 sq.ft. Now let us examine rule 6 and rule 8 of Schedule III to Wealth-tax Act, 1957, which reads as under:- "6. Adjustments to value arrived at under rule 3, for unbuilt area of plot of land-Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, the Assessing Officer, with the previous approval of the Deputy Commissioner, is of opinion that it is not practicable to apply the provisions of the said rule to such a case; or (b) where the difference between the unbuilt area and the specified area exceeds twenty per cent of the aggregate area; or (c) where the property is constructed on leasehold land and the lease expires within a period not exceeding fifteen years from the relevant valuation date and the deed of lease does not give an option to the lessee for the renewal of the lease, and in any case referred to in clause (a) or clause (b) or clause (c), the value of the property shall be determined in the manner laid down in rule 20." 8. As has been pointed out by the ld. DR, in most of the cases, difference between the unbuilt area and specified area exceeds 20 per cent and therefore such properties have to be valued on the basis of rule 20 as prescribed under rule 8. Rule 20 reads as under:- "20. Valuation of assets in other cases.- (1) The value of any asset, other than cash, being an asset which is not covered by rules 3 to 19, for the purposes of this Act, shall be estimated to be the price which, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the later years some of these lands have actually been sold without selling a particular building and/or along with buildings. In these circumstances, such lands have to be held as surplus urban vacant lands. 11. As far as individual properties are concerned, we shall discuss the same in detail while dealing with the each property individually. (ii) Whether deduction of debt claimed is permissible under the provisions of the Wealth-tax Act?" 12. The ld. AR submitted that assessee company has lot of liabilities and such debts are secured by way of equitable mortgage of immovable properties and therefore same should have been allowed to be deducted as liability. 13. On the other hand, the ld. DR submitted that properties owned by the assessee have been brought to charge of wealth-tax after assessment year 1993-94 and section 2(m) of the Wealth-tax Act also stood amended w.e.f. 1-4-1993 and it clearly lays down that only those assets can be deducted, which have been incurred in relation to the said assets. The properties owned by the assessee have been acquired for a very long period and in most of the cases, even prior to 1957, when Wealth-tax Act was introduced and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n clause (iii), clause (iiia) or clause (iiib) of section 27 of the Income-tax Act shall be includible in the net wealth of the person who is deemed under the said clause to be the owner of that building or part thereof. Explanation 2: Where a debt falling under sub-clause (ii) is secured on, or has been incurred in relation to, any asset which is not to be included wholly or partly in the net wealth by virtue of the provisions of sub-section (1A) of section 5, the amount of such debt shall, for the purposes of the said sub-clause, be limited to the value of the said asset which is not includible in the net wealth under sub-section (1A) of section 5." 16. A plain reading of the section makes it clear that net wealth has been defined in the section and the same means amount by which aggregate value of all the assets belonging to the assessee on the valuation date is in excess of value of all the debts owed by the assessee which have been incurred in relation to the said assets. This clearly shows that only those debts can be deducted which have been incurred in relation to the assets, which are included in the said assets. The phrase "in relation to" would clearly indicate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property was Rs. 550 per sq.ft. and in this respect he referred to the guidelines issued by the Sub-Registrar Office Website. Therefore, property was sold at 37.28 per cent of the guideline value and thus same value may be adopted for valuation of various properties. 18. On the other hand, the ld. DR while supporting the order of the Assessing Officer, where he has relied on the decision of Hon'ble Supreme Court in case of Purshottam N. Amarsay v. CWT [1973] 88 ITR 417 and Ahmed G.H. Ariff v. CWT [1970] 76 ITR 471, where it was held that when section 3 imposed a charge on wealth-tax under the net wealth, it necessarily includes in its ambit property of every description. He submitted that it is not necessary that property should be actually sold in the market, but only a hypothetical situation has to be contemplated, where it should be assumed that there existed open market for sale of such an asset. He referred to various clauses of BIFR order and submitted no restriction as such was imposed on the sale of properties. Only certain procedures were prescribed and such sale could be conducted by a sale committee, which comprised the nominees of State Government of Tamil Nadu and K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y hiving all the Engineering Division and Process House into two separate companies, viz., Binny Engineering Works Limited and Binny Processors Limited, modernization of the Textile Division with labour rationalisation, development and sale of real estate properties besides one-time settlement of dues of the banks and limitations with the association of new promoters (M/s. Dynamix Group). (2) To vacate the charge on the non-factory lands and buildings, held in fixed assets/stock-in-trade by the company proposed to be developed by its Real Estate Division, in a scheduled manner and in proportion to the amount received to enable the company to develop the property, enter into sale agreement with the prospective customer which would be possible only when the title is clear. (3) To constitute an asset sale committee comprising nominees of State Government of Tamil Nadu and Karnataka, nominees of IDBI and SBI, two representatives of Management and Special Director appointed by the BIFR to monitor sale of real estate properties and utilisation of sale proceeds". Therefore, the clauses clearly show that no restrictions on sale of property were imposed by the BIFR, rather the order e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defect was pointed out by the ld. counsel by the assessee, were rightly adopted. 22. We are not dealing with the valuation of individual properties at this juncture, because we think the same should be dealt while adjudicating appeals for various years and now therefore, we take up adjudication of appeals for various years. WTA 35/2000 assessment year 1993-94 (assessee's appeal) 23. In this appeal, assessee has raised the following grounds:- "1(a) The Commissioner of Income-tax (Appeals) erred in confirming that the guest houses are includible in the net wealth. (b) The Appellant submits that guest houses being in the nature of transit houses are business assets and were therefore not includible in the net wealth. (c) The Commissioner of Income-tax (Appeals) erred in not considering the alternate ground of the appellant that the transit houses would fall within the scope of rule 3 of Schedule III to the Wealth-tax Act." 24. The brief facts of the case are that the assessee owned four guest houses known as Boat Club Area Guest House, Chiddingstone House, Rother House and Strathern House. Out of these, the Assessing Officer assessed the valuation of the Chiddingstone Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties. This issue has been discussed by us while discussing the principal issues involved in this case and following that decision, we think that the ld. CWT (Appeals) has correctly decided this issue because no such claims that these are business assets or same consisted of servant quarters, tennis court, etc., were made before the Assessing Officer. Similarly, we have already decided that once the difference between unbuilt area and specified area exceeds 20 per cent, then property cannot be valued as per rule 3 to Schedule III. As Assessing Officer has already recorded the findings that difference between unbuilt area and specified area exceeds 20 per cent of the aggregate area, the same has to be valued as per rule 20. In these circumstances, we find nothing wrong with the order of the ld. CWT (Appeals) and confirm the same. 27. In the result, the appeal is dismissed. WTA 47/2000 assessment year 1993-94 (Department's appeal) 28. In this appeal, the Revenue has raised the following effective grounds:- (1) The CIT(A) has erred in holding that the market value of the properties (Guest House) owned by the assessee company has been diminishing in view of the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw. In these circumstances, we set aside the order of the ld. CWT (Appeals) and restore that of the Assessing Officer and direct the Assessing Officer not to deduct any debts outstanding because, same have not been incurred by the assessee in relation to the assets included in the net wealth. Therefore this ground is decided in favour of the Revenue. 31. Ground (3): The brief facts of the case are that the Assessing Officer considered the value of the property situated at Magadi Road as vacant land, which was though given on rent, but the same was shown as vacant land. The value was adopted on the basis of adjacent land of the assessee at Rs. 58,88,839. The CWT (Appeals) adopted the value at Rs. 1 lakh as this land was given on rent by the assessee to Hindustan Petroleum Corporation Ltd., a Government organization, on a lease rent of Rs. 1,000 per month and the lessee had already put up a building on the above property. 32. The ld. AR submitted that vacant plot was leased out to Hindustan Petroleum Corporation Ltd., who have erected a building and, therefore, same is to be valued as per Schedule III. 33. On the other hand, the ld. DR submitted that even if it is considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exclusion was applicable originality only for three years and it was enhanced to five years by the Finance Act, 1994, w.e.f. 1-4-1995 and it was further enhanced to ten years by the Finance (No. 2) Act, 1998 w.e.f. 1-4-1999. But this clause, as would be clear from the provision, is applicable from the date of acquisition. 38. After considering the rival submissions, we find force in the contention of the Id. DR. While adjudicating the principal issues, we have held that once the lands are converted into stock-in-trade and it was further admitted before us that the intention was to sell these properties, then the same has to be held as vacant surplus land. May be, the properties were converted into stock-in-trade to save capital gain tax liability. But then, similar treatment has to given under both the Acts, and assessee cannot blow hot and cold at the same time. That is, when in income-tax proceedings properties have been considered to be stock-in-trade, then these cannot be considered as factory premises while deciding the wealth-tax issues. In any case, no claim that such properties were used for dumping the coal, ash, etc. were raised before the Assessing Officer and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer took the view that when unbuilt area was used, then land appurtenant to the building would mean unbuilt area of the specified by the municipal authorities. Assessing Officer raised a specific query in this regard, but no specific reply was given. In this background, Assessing Officer held that in case of various properties, there was surplus vacant land after excluding the land appurtenant thereto as interpreted by him and balance of such lands were put to charge of wealth-tax under the head 'surplus lands' on the basis of valuation by the registered valuers filed by the assessee during income-tax proceedings, 40. The CWT (Appeals) deleted this addition after observing that the school requires play grounds, the club requires open space for conducting its activities, the residential colony requires space for market, park and pen area of common utility to accommodate gathering in social functions like marriages etc. 41. Before us, various contentions were raised which have already been considered while discussing the principal issues. After considering such contentions and decision taken by us while adjudicating the principal issues, we find that the Buckingham G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax (Appeals) erred in confirming that the value of the following assets should be included in the net wealth though these assets had been transferred and were not in existence on the date of valuation. (a) Rother Guest Houses (b) Chiddingstone (c) Strathern. (3)(i) The Commissioner of Income-tax (Appeals) erred in confirming that the following fixed assets held as stock in trade were includible in net wealth: (a) Ashwell Maidan (b) Boat Club Road - Vacant land (c) Baiderhalli property (d) Hosakere property (e) Nandidurgh property. (ii) He should have found that these assets being used for business purpose were not assessable to wealth." 47. Grounds No. (1) (3) have been decided while adjudicating the appeals of the assessee and Revenue for the assessment year 1993-94 in the above noted paragraphs and following that order, we decide these issues against the assessee. 48. Ground No. (2): In respect of Rother, Chiddingstone and Strathern guesthouses, the only objection taken before us was that the same had already been transferred and therefore the same cannot be included in the net wealth of the assessee. 49. In the written submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve ground:- "2.1 The learned CIT(A) has erred in holding that 16.79 grounds abutting the building known as "Virundhavan" should be left out of valuation and is exempt under section 2(ea)(i)(3) of the WT Act. 2.2 The learned CIT(A) has failed to appreciate that the actual built up area of the building is 5,550 sq. ft. while the abutting vacant land is of the dimension of 37,610 sq. ft. which cannot be regarded as appurtenant land. 2.3 The learned CIT(A) has failed to appreciate that the vacant land being as large as 7 times the dimension of the constructed area cannot by any stretch of imagination be regarded as appurtenant land. 2.4 The learned CIT(A) has failed to appreciate that under normal circumstances only such part of land which are required for the beneficial enjoyment of the building with minimum basic needs can alone be regarded as appurtenant land. 2.5 The learned CIT(A) has failed to appreciate that the direction to allow 16.79 grounds as appurtenant land when compared to the size and building is luxuriant and has no sanction under the law." 56. The brief facts regarding this issue are that the assessee was the owner of the property called Vrindavan measurin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of Wealth-tax Act to determine the extent of land which could be regarded as either reasonable or necessary or as being appurtenant to the house. It was further observed that it is not for the authority to decide as to what size the assessee's house may be, or the extent of garden or other area attached to the house. Any such enquiry is outside the scope of Wealth-tax Act. This clearly means, even if only small portion was constructed, rest of the unbuilt area has to be treated as land appurtenant to this building, which has been treated as fixed assets by the assessee-company and thus exempt under section 2(ea) as business assets. However, as far as 2 grounds which were converted into stock-in-trade by the assessee company in 1982 is concerned, the same has been rightly included in the net wealth by the ld. CWT (Appeals) and we confirm the same, following our observations made while discussing the principal issues. Here it is pertinent to note that the ld. CWT (Appeals) has adopted the sale value of this land, which was made in the assessment year 1996-97. Therefore, even if rule 20 is applied, it will lead only to determination of market value which has already bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roleum Ltd." 65. After hearing both the parties, we find that this issue has been set aside to the file of the Assessing Officer while deciding the Revenue's appeal for assessment year 1993-94 and following that, we set aside this issue to the file of the Assessing Officer with similar directions as noted in the above paragraphs. 66. In the result, the appeal is allowed for statistical purposes. WTA 57/Mds/2003 assessment year 1995-96 (Assessee's appeal) 67. In this appeal, assessee has raised the following grounds of appeal:- "(1)(a) The Commissioner of Income-tax (Appeals) erred in conforming the inclusion of the following properties held as 'stock-in-trade' at the estimated market value in the computation of net wealth: (i) Ash well Maidan, Chennai (ii) Boat Club Road, Chennai. (b) The Appellant submits that the valuation of the properties, which were encumbered, cannot be taken at the estimated market value. (2)(a) The Commissioner of Income-tax (Appeals) erred in confirming the inclusion of the following properties at the estimated market value in the computation of net wealth: (i) Buckingham Garden (ii) Carnatik Garden (iii) Joint School Compound (iv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebts. (2) The Commissioner of Income Tax (Appeals) erred in confirming that the value of the following assets should be included in the net wealth though these assets had been transferred and were not in existence on the date of valuation. (a) Rother Guest Houses (b) Chiddingstone (c) Strathern. (3)(i) The Commissioner of Income Tax (Appeals) erred in confirming that the following fixed assets held as stock-in-trade were includible in net wealth: (a) Ashwell Maidan (b) Boat Club Road - Vacant land (c) Baiderhalli property (d) Hosakere property (e) Nandidurgh property. (ii) He should have found that these assets being used for business purpose were not assessable to wealth." 74. Ground Nos. (1) (3) have been decided while adjudicating the appeals of the assessee and Revenue for the assessment year 1993-94 in the above noted paragraphs and following that order, we decide these issues against the assessee. 75. Ground No. (2)- In respect of Rother, Chiddingstone and Strathern guesthouses, we have discussed in detail in the above noted paragraphs in Assessee's appeal for 1994-95 and have confirmed the order of the ld. CWT (Appeals). Following that decision, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y deleted the addition on account of Boat Club Road properly amounting to Rs. 13,34,85,000 which was given for development to M/s. Somdutt Builders. 84. The brief facts of the case regarding this property are that on a total area of 46.79 grounds which is approx. 1,15,000 sq. ft., only building which was constructed was 9262 sq.ft. In respect of this property, 20 grounds were converted into stock-in-trade. This property seems to have been given for development to M/s. Somdutt Builders for joint development for Rs. 25,27,20,000. According to the Assessing Officer, the assessee was still the owner of the property, because no Sale Deed has been executed. Therefore, a sum of Rs. 13,34,85,000 was added to the net wealth on account of this property. 85. The ld. CWT (Appeals) observed that assessee had already entered into Moll with Somdutt Builders because assessee has already received the consideration. 86. After hearing both the parties, we find it is not clear from the records whether assessee was also to share some amount of property after development because copy of MoUs etc. was not filed. However, we think that the amount raised from Somdutt Builders has to be treated as a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above noted paragraphs and following that order, we decide these issues against the assessee. 90. Ground No. (3): Some properties consisted of vacant land comprising of properties viz., Vyasarpadi, Cooks Road, Tank Bund and Magadi Road, which were charged to tax as same were vacant lands and not includible in the stock-in-trade. The action of the Assessing Officer has been confirmed by the CWT (Appeals). 91. Before us, the ld. AR submitted that Cooks Road property is basically land appurtenant to canteen, therefore same should be held to be business asset and cannot be charged to tax. In this regard, he relied on the decision of Bangalore Bench of the Tribunal in case of Sree Suryodhaya Industries Ltd. v. DCWT [1997] 63 ITD 287 (Bang.). In respect of Vysarpadi property, it was submitted that same was used for paring of the vehicles of employees and therefore same should be treated as business assets. 92. After considering the rival submissions, we find that though in grounds of appeal and in the orders of the lower authorities, these lands have been considered as vacant surplus lands not converted into stock-in-trade, but in the written submissions by the ld. counsel of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of Magadi Road property from Rs. 2.61 crores to Rs. 1 lakh. 96. This issue has already been set aside by us to the file of the Assessing Officer while deciding the Revenue's appeal for the assessment year 1993-94 and therefore following that order, this issue is set aside to the file of the Assessing Officer with direction to follow our observations made for assessment year 1993-94. 97. In the result, the appeal is allowed for statistical purposes. WTA 59/Mds/2003 A.Y. 1997-98 (Assessee's appeal) 98. In this appeal, assessee has raised the following grounds:- "1.(a) The Commissioner of Income-tax (Appeals) erred in confirming the inclusion of the property at Ashwell Maidan, Chennai, held as 'stock-in-trade' at the estimated market value in the computation of net wealth. (b) The appellant submits that the valuation of the properties, which was encumbered, cannot be taken at the estimated market value. 2.(a) The Commissioner of Income-tax (Appeals) erred in confirming, the inclusion of the following properties at the estimated market value in the computation of net wealth: (i) Buckingham Garden (ii) Carnatik Garden (iii) Joint School Compound (iv) Binny Field ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd was set aside to the file of the Assessing Officer. Here also, we set aside this issue to the file of the Assessing Officer with a direction to follow same directions. 107. Ground No. (2): The Assessing Officer estimated the value of properties situate at Chhidingstone House Bangalore, Rother House Bangalore and Strethern House Bangalore at Rs. 13,12,41,000 on the basis of valuation made by DVO. The ld. CWT (Appeals) confirmed the taxability of these three properties. However he observed that assessee company had entered into joint agreement with HMG Engineering Pvt. Ltd. on 21-3-1995 and received a sum of Rs. 6 crores from the said company as consideration for giving them the right to develop these properties and to take 50% of the net property on the sale of developed properties. He observed that matter was under dispute therefore Assessing Officer should again fix the value of the such properties. However, he directed the Assessing Officer to adopt a sum of Rs. 6 crores received from HMG Engg. Pvt. Ltd. as debt. 108. Before us, the ld. DR referred to the agreement entered into with HMG Engineering Pvt. Ltd. and carried us through various clauses and emphasized that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's appeal) 112. The assessee has raised the following grounds:- "1(a) The Commissioner of Income-tax (Appeals) erred in confirming the inclusion in the net wealth, the following properties uses as transit houses: (i) Waterside Bungalow, Chennai (ii) Rother House, Bangalore (iii) Strathern House, Bangalore (iv) Chiddingstone House Bangalow, Bangalore. (b) He should have found that the transit house was used only for the stay of officials of the company for official purposes. (c) In any event and without prejudice to the above claim, the Commissioner of Income-tax (Appeals) erred in confirming the rejection of rent capitalization method and adoption of estimated market value for valuation of the abovementioned properties. (d) The Commissioner of Income-tax (Appeals) erred in confirming that the value of these assets should be made, without reducing the value of debts. (e) He should have found that there was an embargo on the sale of the property and adopting market value based on hypothetical sale was not justified. 2.A(a) The Commissioner of Income-tax (Appeals) erred in confirming the valuation of the Assessing Officer at the estimated market value in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sarpadi, Cooks Road and Tank Bund Road property. 115. As far as Mangadi Road property is concerned, this issue has already been set aside by us and following our decision in the Revenue's appeal for assessment year 1993-94, here also we set aside the issue to the file of the Assessing Officer and direct him to follow the directions given by us in assessment year 1993-94. 116. Ground No. (3): After hearing both the parties, we find that Baiderhalli property, Hosakere property and Nandidurgh property all situated in Bangalore have been treated as stock-in-trade by the assessee. Details regarding Ashwell Maidan have already been discussed for earlier years. This issue has been decided while adjudicating the appeals of the assessee and Revenue for the assessment year 1993-94 in the above noted paragraphs and following that order, we decide these issues against the assessee. 117. Ground Nos. (4) (5): These issues have been decided while adjudicating the appeals of the assessee and Revenue for the assessment year 1993-94 in the above noted paragraphs and following that order, we decide these issues against the assessee. 118. In the result, the appeal is partly allowed. WTA 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Wealth-tax Act, 1957 in section 2(h) the company has been defined as having the meaning assigned to it in clause 17 of section 2 of the Income-tax Act. Section 2(17) of the Income-tax Act defined only the company in general. Sub-section 18 of section 2 of the Income-tax Act defines the Companies in which public are substantially interested inter alia the shares of the company are listed in the stock exchange. The appellant will be coming in the definition of section 2(18) of the Income-tax Act. In the absence of exclusive definition in the Wealth-tax Act in respect of companies in which the public are substantially interested as defined in section 2(18) of the Income-tax Act, the company will not be coming under the purview of definition of section 2(17) of the Income-tax Act. (c) Even though the charging section 3 of the Wealth-tax Act speaks about the inclusion of company for the purpose of Wealth-tax, tilt-definition of section 2(m) specifically omits company from charge of Wealth-tax. The definition under section 2(m) mentions "assets required to be included in his net wealth" and hence it speaks about charging assets only of individuals and HUF and not companies. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that there was an embargo on the sale of the property. 6.(a) The Commissioner of Wealth-tax, Appeals erred in including the net wealth an estimated market value of the following assets held as stock-in-trade, which are encumbered. Rs. Ashwell Maidan, Madras 4,39,29,655 Baiderhalli Property, Bangalore 1,40,33,241 Hosakere Road, Bangalore 1,08,19,160 Nandidurgh Road, Bangalore 82,23,600 (b) The appellant submits that the valuation of the property, which is encumbered, cannot be taken at the value of a property, which is free from encumbrance. 7. The Commissioner of Wealth-tax, Appeals erred in including the net wealth the value of land appurtenant to building used as factories, canteens, administrative office and work place at an estimated market value. 8. The Commissioner of Wealth-tax, Appeals erred in ignoring the debts secured on the assets of the company in computing their value for wealth tax purpose." 128. Ground No. (1): The ld. AR reiterated the grounds of appeal. On the other hand, the ld. DR submitted that it is clear from the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Diu, and Pondicherry, a company formed and registered under any law for the time being in force in that Union territory:] Provided that the [registered or, as the case may be, principal office of the company, corporation, institution, association or body] in all cases is in India; The appellant being a company formed and registered under the Companies Act, 1956, it has to be treated as an Indian company and therefore it squarely comes under the definition of section 2(17) of the Income-tax Act and therefore it is exigible to wealth tax. The definition under section 2(18) is for the phrase "company in which the public are substantialy interested" and it has no relevance to the case of the appellant." 130. We think the ld. CWT (Appeals) has correctly decided this issue, because section 3, which is the charging section, very clearly includes companies also in its ambit and therefore wealth-tax provisions are applicable in case of companies also. In these circumstances, we find nothing wrong with the order of the ld. CWT (Appeals) and confirm the same. 131. Ground Nos. (2) to (7): These issues are discussed by us while adjudicating the principal issues as well as the grounds ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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