TMI Blog2006 (12) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... . Apropos ground No. 1, the facts were discussed by WTO on page 3 of the assessment order passed under section 16(3) read with section 17 dated 31-3-2004, assessment year 1999-2000. It was found from the Wealth-tax statement filed along with the return that the assessee has claimed deduction of Rs. 1,09,15,787 on account of tied-up loans from the employees from the value of vehicles. In compliance of show-cause notice, the response of the assessee was that the tied-up loans from vehicles represented the amount of security deposit and the amount collected from the employees in respect of vehicles used by those employees. Those deposits and amount collected was considered as a debt owed by the company against the respective vehicle. The assessee has produced copy of the scheme of vehicle loans and conveyance reimbursement, as stated by the Assessing Officer. On going through this scheme, the observation of the Assessing Officer was that the tied-up loan was nothing but the amount contributed by the employees to whom vehicles have been allotted on the understanding that those vehicles will be ultimately sold to them. According to Assessing Officer, the scheme did not show that the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an is completely repaid. All applicable taxes and rates are to be paid by the allottee (employees) of the vehicle, subject to reimbursement of expenses according to the scheme. In the event of an employee leaving the services without completing the vehicle scheme, that is, before completion of the sixty months period, the employee has to necessarily buy the vehicle from the Company after paying the balance amount: Ld. CWT(A) has also reproduced the observation of the Assessing Officer in this regard, however, concluded that in assessee's own case for assessment year 1998-99, this issue had been decided in favour of the revenue by his predecessor. The CWT(A) has simply followed that decision without any further discussion on the subject. At this juncture, it is worth mentioning that Ld. A.R. Mr. R.D. Onkar has made a statement at bar that no appeal was preferred by the assessee in that year due to an oversight. Since the action of the Assessing Officer was confirmed by Ld. CWT(A), hence the issue is now further in appeal. 4. From the side of the appellant, Mr. R.D. Onkar appeared and submitted the scheme of vehicle loan running into 13 pages. The compilation filed by him also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n an another clause which has covered a condition of "pre-mature withdrawal from vehicle scheme on separation". This clause has provided that in case of a separation without completing the scheme, a wear and tear margin at the rate of 9.5 per cent per annum will be admissible. Interest at the vehicle scheme rate will be charged on the loan amount. Ld. A.R. has clarified that the term "separation" means premature retirement or leaving the service of the company. On the basis of this factual background, we have examined the definition of "net wealth" as prescribed in section 2(m) of Wealth-tax Act, according to which, the amount by which the aggregate value computed of all the assets belonging to the assessee in excess of the aggregate value of all the debts owed by the assessee on the valuation date which have been incurred in relation to the said assets. So, the first condition is that an asset should belong to an assessee. The parties appearing before us have no dispute as far as the applicability of this condition is concerned because as per the scheme, it was specifically mentioned, as noticed by us above, that those vehicles should remain in the name of the company till the loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o nexus with the asset, i.e., car. We have also examined the relevant terms and clauses through which the accepted position is that the employees have to contribute in instalment towards the cost of the said asset. Almost identical view has also been expressed in an another decision by ITAT, Calcutta Bench in the case of Dy. CIT v. S.C. Investments Industries Ltd. [2004] 89 ITD 44 though in the context of the applicability of provision of section 14A of Income-tax Act. To arrive at a right conclusion, we also draw support from the analogy given by Hon'ble Calcutta High Court in the case of Bajoria Properties (P.) Ltd. In that case, the assessee was the owner of a property. The assessee-company entered into an agreement for sale of the property for a consideration of Rs. 3 crores. Out of the said amount of Rs. 3 crores, Rs. 50 lakhs was paid during the year under consideration. The intending purchaser obtained the possession of the property. It was contended by the assessee before the Assessing Officer that the sum of Rs. 50 lakhs paid by the intending purchaser should be deducted as a liability from the said sum of Rs. 3 crores. The Assessing Officer rejected the claim but the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the first appellate authority has opined that the rates of depreciation provided under the Income-tax Rules do not necessarily reflect the normal wear and tear suffered by the assets. According to him, the benefit as prescribed in Income-tax Act contain an element of fiscal incentive by way of accelerated depreciation. He has also mentioned that in the absence of insurance value of cars, the Assessing Officer was justified in adopting books written down values of the cars as the assessable values of the cars. 9. Submissions of both the sides have been heard. Orders of the authorities below perused. Facts as narrated above are not in dispute that the Assessing Officer has adopted the value of the vehicles as shown in the books of account of the assessee, however, on the other hand, the assessee has claimed that the value of the car should be the WDV allowed under Income-tax Act. It has been clarified during the course of hearing that the assessee has adopted lesser rate of depreciation in the books of account and due to that reason, the WDV of the vehicles was towards higher side than the WDV as calculated under Income-tax Act in the Income-tax assessment records. Under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, there was no question of adopting higher value, had no force. Rule 14(2)(a) provides for a general rule applicable to all the assets of a business disclosed in the balance sheet, that is, assets on which depreciation is admissible, and in case of closing stock. Clause (a) cannot be said to be a provision for determining value of a particular asset like rules provided in rules 3 to 8 for valuing the immovable property, rules 9 to 30 providing for valuation of shares and debentures, rule 17 providing for valuation of life interest and rules 18 and 19 providing for valuation of jewellery. In absence of any specific rule for valuation of motor car, the Assessing Officer has to resort to rule 20 only. The rule 20 provides for valuation of an asset to be the price which in the opinion of Assessing Officer it would fetch if sold in the open market on the valuation date, that is, its market value. To accept the contention of the assessee would be to make the provisions of clause(b) to rule 14 redundant as it could never have application under any circumstances. Reason being the clause (b) comes into operation only when a property is subject-matter of valuation under clause(a) t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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