TMI Blog2016 (4) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... company, cannot be included in the taxable wealth of a company. In light of the abovementioned legal position, we hold that the assessee-company continues to be owner of the lands and is liable to wealth-tax. With regard to the claim of the assessee-company that refundable deposits received from M/s.Classic Enterprises in terms of the development agreement should be allowed as a deduction from the value of the assets computed, it is undisputed fact that refundable deposit was received subsequent to acquisition of the asset. The refundable deposit has no nexus with the acquisition of assets in question. Therefore, the claim of the assessee-company cannot be allowed. - WTA Nos. 37 to 42/Bang/2014, WTA Nos.43 to 45/Bang/2014, WTA Nos.46 to 51/Bang/2014 - - - Dated:- 12-2-2016 - Shri Vijay Pal Rao, Judicial Member And Shri Inturi Rama Rao, Accountant Member For the Petitioner : Shri C. P. Ramaswamy, Advocate For the Respondent : Shri Sanjay Kumar, CIT (DR) ORDER Per Bench These appeals by three assessees are directed against the respective orders of the learned Commissioner of Wealth tax ( Appeals) [CWT(A)] for the assessment years 2002-03 to 2007-08. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant in its accounts. Consequently, she erred in upholding the assessment as valid. c) The learned CWT(Appeals) failed to appreciate that there cannot be fiction upon fiction in the view that in the year of sale (financial year 2007-08) the impugned asset was treated as long-term capital asset in terms of section 2(42A) of the Income-tax Act, 1961 and thereby for the purposes of the Wealth Tax Act , 1957 also the impugned asset had to be deemed as stockin- trade as on the valuation date namely 31stMarch 2002. Consequently,she erred in confirming the assessment. d) The learned CWT(Appeals) failed to appreciate that the doctrine of 'approbate and reprobate' is a species of the law of estoppel and does not operate against law. It operates only against facts. Consequently, she erred in upholding the assessment as valid. 4) Without prejudice to ground No.3: The learned CWT(Appeals) failed to appreciate that in determining the fair market value as on the valuation date, the DVO did not factor in the irrevocable joint development agreement impacting the FMV. Consequently, she erred in adopting gross FMV as determined by the DVO, without further reducing the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iterated the same contentions as advanced before the AO that the land was held as stock-in-trade and not as an asset, therefore, out of the purview provisions of the Act. It was further contended that the deposit of ₹ 11.3 crores received pursuant to JDA with M/s.Classic Infrastructure Development Ltd., should be reduced from the value adopted for wealth-tax purposes. The contentions of the assessee-company were turned down by the ld.CWT(A) by holding that the arguments of the assesseecompany were contrary to the evidence on record and the treatment given in the books of account and the very fact that the assessee offered profit arising from subsequent sale of property to M/s. ITC in the assessment year 2008-09 as a capital gain goes to prove that the property in question is only a capital asset. The plea of the assessee-company that refundable deposit of ₹ 11.3 crores should be reduced from the value adopted was negative by the ld.CWT(A) by holding that it is not a debt incurred in connection with acquiring the asset. 7. Being aggrieved, assessee-company is before us with the present appeals. 7.1 Learned counsel for the assessee urged before us that once the land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The lands are stock-in-trade and therefore, not liable to wealth-tax; ii. When the lands are subject matter of JDA, possession of the lands was given to the developer, assessee-company ceased to be a owner of the property and therefore, value of the lands cannot be included in computing net wealth of the assessee-company. 8.1 We shall now first deal with first limb of the arguments, viz., whether the lands are stock-in-trade, as claimed by the assessee-company? Undisputedly, assessee-company has been showing these lands as investment in the books of account regularly maintained by it. Even in income-tax proceedings, lands were shown as capital asset and profit arising in subsequent sale of land to M/s. ITC Ltd. was shown under the head capital gains and benefit of indexation was obtained. No doubt, it is settled principle of law that the finding in income-tax proceedings is not relevant for the purpose of wealth-tax proceedings but the crucial facts to be noticed in this case is that the assessee company was not able to demonstrate before us that the lands were held as stock-in-trade by the assessee-company with any material. Therefore, unless contrary is proved, it is pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience. Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers-of- Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee. An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor. and finally concluded that the GPA do not convey title and do not amount to transfer nor can they be recognized as a valid mode of transfer of immovable property observing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sense of conveying ownership... ...that only on execution of conveyance ownership passes from one party to another.... In Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [2004 (8) SCC 614] this Court held: Protection provided under Section 53A of the Act to the proposed transferee is a shield only against the transferor. It disentitles the transferor from disturbing the possession of the proposed transferee who is put in possession in pursuance to such an agreement. It has nothing to do with the ownership of the proposed transferor who remains full owner of the property till it is legally conveyed by executing a registered sale deed in favour of the transferee. Such a right to protect possession against the proposed vendor cannot be pressed in service against a third party. It is thus clear that a transfer of immoveable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immoveable property can be transferred. 11. The Hon ble jurisdictional High Court, in the case of Wipro Ltd. vs. DCIT reported in 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed. the same shall be read as if done by the principal. A power of attorney is a document of convenience. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. It is revocable or terminable at any time unless it made irrevocable in a manner known to law. 143. Therefore even if s.2(47) is held to be applicable to a stock-in-trade, unless the transaction in question has the effect of transferring or enabling the enjoyment of any immovable property, it would not amount to a transfer. 144. In the instant case. assessee executed a power of attorney after entering into an agreement of sale for the purposes mentioned therein. It is in pursuance of the power so conferred, coupled with the terms f the agreement of sale, the power of attorney holder has to develop the property, identify the purchasers and sell the undivided share of land as well as the built area to such purchasers. Neither in the agreement of sale nor in the power of attorney, possession of the property was given to him. Having regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 4 use the expression belonging to an individual . The term belonging had come up for interpretation before the Hon ble Supreme Court in the case of CWT vs. Bishwanath Chatterjee (103 ITR 536) and late Nawab Sir Mir Osman Ali Khan (162 ITR 888) wherein the Hon ble Supreme Court held as under: The apex court in the case of Bishwanath Chattejee [1976] 103 ITR 536 (page 539): The expression 'belong' has been defined as follows in the Oxford English Dictionary :-'To be the property or rightful possession of.' So it is the property of a person, or that which is in his possession as of right, which is liable to wealth-tax. In other words, the liability to wealthtax arises out of ownership of the asset, and not otherwise. Mere possession, or joint possession, unaccompanied by the right to, or ownership of property would therefore not bring the property within the definition of 'net wealth' for it would not then be an asset 'belonging' to the assessee. The apex court in the case of (Late) Naivab Sir Mir Osman All Khan [1986] 162 ITR 888 has observed (page 899): In all these cases, as was reiterated by the Cal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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