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2016 (9) TMI 985 - MADRAS HIGH COURT

2016 (9) TMI 985 - MADRAS HIGH COURT - [2016] 388 ITR 37 - Reopening of assessment - claim of deduction of proportionate liability from the gross wealth of the appellant - Held that:- When once all the assets of the business are sought to be valued, the necessity to undertake individual or proportionate distribution of the debts is not required to be undertaken separately. It is a fundamental principle of law that no part of a Statute should be construed as carrying no meaning at all. Every prov .....

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and the principle that would become applicable. - In that view of the matter, the Assessee has made a claim to extend the proportionate liability to the value of the 3 assets that was initially applied by the Assessing Officer, but however, it was taken up for re-examination under Section 17 of the Act. Unfortunately, the re-examination has not been confined to that specific area at all and it went into the merits of the matter. - In normal circumstances, we would have remanded the matte .....

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7 - Dated:- 8-9-2016 - Nooty Ramamohana Rao And P. Devadass, JJ. For the Appellant : Mr. N. Quadir Hoseyn For the Respondent : Mr. J. Narayanaswamy JUDGMENT ( Judgment of this Court was delivered by Nooty Ramamohana Rao, J ) These Tax Case Appeals are preferred by the Assessee under Section 27A of the Wealth Tax Act, 1957, aggrieved by the orders passed by the Income Tax Appellate Tribunal 'D' Bench, Chennai, by its order dated 16.12.2005, for the assessment years 1999-2000, 2000-2001 an .....

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of net wealth made by the appellant in accordance with Rule 14 of Schedule III to the Wealth Tax Act? (iv) Whether the Tribunal was not correct in applying Section 7 r/w Schedule III, Rule 14 for arriving at the net taxable wealth of the appellant-Bank 2. The Assessee was carrying on Banking business. It has filed its Wealth Tax Return for the assessment year 1999-2000, on 15.10.2001, admitting the net-wealth at ₹ 1,81,000/-. The said Return was processed under Section 16(1) of the Wealth .....

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he tax payable thereon as ₹ 2,19,520/-. He has taken into account the depreciation statement filed for the purpose of assessment of income tax as on 31st March 1999, for determining the wealth of the 3 assets, viz., quarters, building-sites purchased during the year that ended on 31st March 1999 and the Motorcars. 3. The Assessee preferred appeals to the Commissioner of Income Tax Appeals, who, by his order dated 31st January, 2005, rejected the 3 appeals. The Income Tax Appellate Tribunal .....

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- [(i) any building or land appurtenant thereto (hereinafter referred to as "house"), whether used for residential or commercial purposes or for the purpose of maintaining a guest house or otherwise including a farm house situated within twenty-five kilometres from local limits of any municipality (whether known as Municipality, Municipal Corporation or by any other name) or a Cantonment Board . 5. Any building or land appurtenant thereto, whether used for residential or commercial pur .....

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house which the assessee may occupy for the purposes of any business or profession carried on by him; (4) any residential property that has been let-out for a minimum period of three hundred days in the previous year; (5) any property in the nature of commercial establishments or complexes.] . 6. The very first item excluded clearly brings out that the house, meant exclusively for residential purposes and which is allotted to by a Company to a Whole-Time Director having a gross annual salary of .....

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y and its Chairman, is a Whole Time Director and therefore, the remuneration paid to such a Whole Time Director by the Assessee ought to have been ascertained and only in that event, if the salary so paid is more than ₹ 5 lakhs, such a residential quarters can be included and be treated as an 'asset' of the Assessee for the purpose of the Wealth Tax. Unfortunately, neither the Assessing Officer nor the Appellate Authority made any attempt, whatsoever, to ascertain as to how much sa .....

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her known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the valuation date; or (ii) in any area within such distance, not being more than eight kilometers from the local limits of any municipality or cantonment board referred to in sub-clause (i .....

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m the date of its acquisition, has been kept outside the purview of the meaning as ascribed to the expression 'Urban Land'. Since the Assessing Officer has taken note of the value of the assets from the depreciation statement filed for purposes of reckoning income tax by the Assessee wherein the building sites purchased during the year ended on 31st March 1999 have been reflected, it would be safe to infer that the Assessee has acquired those building sites during the year that ended on .....

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n recognised as industrial activity, no doubt for purposes of Industrial Disputes Act, 1947, in the context of retrenchment of employees working in such Banking Institutions, the question came to be examined and it was answered that those who satisfied the definition of 'workmen' assigned to that expression under Section 2(s) of the Industrial Disputes Act, 1947 are liable to be treated as workmen of the Banking Industry and in any number of cases, the Supreme Court has applied the benef .....

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rstanding the expression 'industrial purposes' used in Clause (b) of the Explanation found under Section 2(ea) of the Wealth Tax Act, 1957. All the more so, in the absence of any specific meaning ascribed to the expression 'industrial purposes' by the said Act, we, therefore, consider it safe to treat the Banking activity carried on by the Assessee as an Industrial Enterprise and, hence, we hold that any vacant land held by it, its usage, falls squarely within the expressions  .....

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l the 3 Authorities, namely, the Assessing Officer, the Appellate Commissioner and the Income Tax Appellate Tribunal, have concurrently held that residential quarters allotted to the Chairman of the Assessee and the vacant land, were treated as assets and hence no interference, from such a finding of fact concurrently recorded, is warranted. 12. In normal circumstances, we do not have made an attempt to upset the concurrent finding of fact recorded by all 3 Agencies, but, however, when the very .....

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be noticed is that the Assessee made a claim for proportionate liability for all the three assets which it has disclosed in its Wealth Tax Return. Though the claim for proportionate liability is accepted at the first instance, but, however, the assessment was reopened only for purposes of examining the correctness of such a claim. In the instant case, it is therefore appropriate to examine the correctness behind the claim of the Assessee with regard to the proportionate liability. 14. The expres .....

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ion date which have been incurred in relation to the said assets;] . 15. A perusal of the definition quoted supra clearly brings out that the aggregate value of all the assets is required to be computed in accordance with the provisions of the said Act and, in case, the aggregate value of all debts owed by the Assessee have been incurred in relation to the said assets are also required to be noticed. Section 7 has dealt with as to how the value of the assets are to be determined. Sub-section (1) .....

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.1993. Part-D dealt with the valuation of the assets of business. We are concerned in this case, with the assets of business. Para 14 of Part-D of Schedule-III of the Act makes it clear that where the Assessee is carrying on a business for which accounts are maintained by him regularly, a net value of the business as a whole having regard to the Balance Sheet of such business, shall be taken as the value of such assets for purposes of the Wealth Tax Act. The Proviso added to this Para 14 reads a .....

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a whole, are not undertaken in the instant case. The reasoning assigned by the Commissioner of Appeals is hardly satisfactory. Rule 14 of Part D of the Schedule-III of the Act, dealt with valuation of the assets of the business. When the whole of the assets of the business are being assessed, the particular assets which the Assessee has declared in its Wealth Tax Return, cannot be kept outside the assets of the business. Therefore, the applicability of Rule 14 cannot be circumvented. The Proviso .....

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