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TMI Blog1997 (6) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... s order dated 3-5-1994, partly allowed the appeal. Now, against the unsuccessful portion of the claim of the assessee before the CWT(Appeals), the present second appeal is filed. 2. In this wealth-tax appeal the, first ground is with regard to valuation of Chunabhatti & Chembur properties whose value was confirmed at ₹ 20,30,000. This ground was withdrawn by Shri Prakash Jotwani, learned counsel for the assessee, on 11-11-1996. So also, the 4th ground, which deals with valuation of land at Baroda, which was fixed by the lower authorities at ₹ 1,26,750, was also withdrawn on 11-11-1996 itself. Out of ground Nos. 2, 3, 5 and 6, ground No. 6 is general in nature under which leave to amend, alter or vary the grounds only was prayed for. However, no petition praying leave either to amend, alter or vary the grounds of appeal was filed. Therefore, we are virtually left with ground Nos. 2, 3 & 5, which are as follows : - "2. The CWT(Appeals) erred in taking Patel House as Wealth of the assessee though appellant is not owner of the same as it is a lease-hold property. 3. Without prejudice to what is stated above the CWT(Appeals) erred in confirming the valuation of Pat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the ground floor was intended to be a commercial complex and the other flats were intended for residential purposes. It is further submitted that the shopping complex was sold to a sister concern called Bama Departmental Stores Pvt. Ltd. It is submitted that in the earlier years the Tribunal held that the whole property was not liable for wealth-tax under section 40 of the Finance Act, 1983, and in support thereof, the assessee produced the Tribunal';s order dated 9-12-1994 for assessment years 1988-89 and 1989-90 at pages 1 to 5 of the small paper book filed. The assessee also filed an order of the Tribunal dated 11-8-1995 rejecting the reference sought by the revenue for assessment years 1988-89 and 1989-90. It is submitted that in the earlier years the Tribunal based its decision on the decision rendered by the Calcutta Bench of the Tribunal in Asst. CWT v. Park Hotel (P.) Ltd. (1992) 41 ITD 501wherein it was held that the provision of section 40 is a self-contained code, that the immovable property could be brought to tax in the hands of the assessee-company only if the property belonged to the assessee- company. If the assessee-company was not the owner, it would be do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier years should not be followed for the year in question, then the only way for this Tribunal is to refer the matter to a Special Bench but not to pass a considered order or order on merits by the Tribunal itself. The learned counsel for the assessee relied upon Mohan Exports (I) (P.) Ltd. v. Asst. CWT (1997) 60 ITD 473(Delhi) for the proposition that section 40 of Finance Act, 1983, is a special provision and, therefore, it will prevail over the general provisions of the Wealth-tax Act contained under section 2(m) Explanation 1 after it is amended w.e.f. 1-4-1988 as can be seen from clause (5)(b) of section 40 of the Finance Act which categorically excludes application of any provisions of the Wealth-tax Act not conforming to section 40 of the Finance Act. On the other hand, the learned Departmen- tal Representative submitted the following arguments. In view of the unmistakable indicia available in the various terms of the lease deed now produced by the assessee, the assessee can easily be found to be the owner of the property. It is submitted that in the earlier order of the Tribunal relied on by the assessee the lease deed was not considered by the Tribunal. It is not correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 ITR 273held that the leasehold right in favour of the assessee for more than 6 years is an asset within the meaning of the Wealth-tax Act and its value should be included in the Wealth. Therefore, the learned Departmental Representative contended that in this case the lease is for 98 years. Several clauses of the lease deed would clearly show that the assessee can exercise all the rights of an absolute owner of the property. Therefore, the assessee-company should be considered to be the owner of the property and the leasehold property should be considered as belonging to the assessee. The learned Depart- mental Representative also contended that neither the earlier order passed by this Tribunal for assessment years 1988-89 and 1989-90 nor the Park Hotel (P.) Ltd.'s case (supra) are not worthy to be followed inasmuch as they missed to consider the most important facts of the case. In Park Hotel';s case, the term of lease was only just above 6 years. In the earlier years, while deciding the assessee';s case for assessment years 1988-89 and 1989-90, this Tribunal did not summon either the lease deed, did not examine the salient stipulations of the lease deed and did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Park Hotel (P.) Ltd.'; s case (supra) was in conformity with the provisions of the Finance Act, 1983, or whether the propositions laid down under the said decision would pass muster after a critical scrutiny of the provisions of section 40 of the Finance Act, 1983. Firstly, in our view, the proposition laid down in that case that section 40 of the Finance Act is a self-contained code cannot be supported by a bare reading of the provisions of that Act. Under sub-section (1) of section 40 of the Finance Act, it is stated that wealth-tax shall be charged under the Wealth-tax Act for every assessment year commencing from 1-4-1987 in respect of net wealth on the corresponding valuation date of every company not being a company in which public are substantially interested. Sub-section (2) as far as relevant to our purpose, reads as follows : "(2) For the purposes of sub-section (1), the net wealth of a company shall be the amount by way the aggregate value of all the assets referred to in sub-section (3), wherever located, belonging to the company on the valuation date is in excess of the aggregate value of all the debts owed by the company on the valuation date which are secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Wealth-tax Act shall be construed so as to be in conformity with the provisions of section 40 of the Finance Act. Therefore, having regard to the above provisions of the Finance Act, we are unable to agree with the proposition laid down in Park Hotel (P.) Ltd.';s case (supra) that the provision of section 40 is a self-contained code and the definition of "Assets" under section 2(e) of the Wealth-tax Act cannot be invoked while dealing with a case under section 40 of the Finance Act, 1983. More particularly, the ratio of Park Hotel (P.) Ltd.';s case (supra) is that the leasehold interest of more than 6 years held by an assessee-company in a particular land cannot be included in the net wealth of the assessee-company. In our view, the finding of the Calcutta Tribunal on this aspect of the matter also cannot be supported under law. The only discussion in this regard in Park Hotel (P.) Ltd.';s case (supra) is the following : "It further directs that the remaining provisions of Wealth-tax Act shall be so construed as to be in conformity with the provisions of section 40 of the Finance Act, 1983. Section 2(e) of the Wealth-tax Act is one such prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connotation. Assuming without admitting that the words "belonging to" are synonymous of conveying the ownership rights in an asset to the assessee is correct, let us examine the facts of the present case before us. In this case, the lease deed contained several important clauses. The lease deed, as already stated, is for 98 years. Under the terms of clause IV(2), it is stated that if the lessees shall desire of having further lease of the said premises after the expiry of the term hereby granted and if such desire is expressed by a notice in writing to the lessors not less than 6 months before the expiry of the term hereby granted, the lessors shall grant to the lessees a further lease of the said premises for a term of 98 years at the same rent upon the same terms, covenants, stipulations, provisions and agreements as are herein contained including the present covenant for renewal. Therefore, it is seen that no doubt in the first instance the lease is for a period of 98 years but it can go on renewing for successive block periods of 98 years each. Under clause II(11), though the absolute assignment of the whole interest or part thereof cannot be made by the lessees, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es purchaser. The term also has the extended meaning of a person whose right to a thing is short of entire beneficial ownership such as a lessee for a term of years." The words "belonging to" occurring in a deed had fallen for interpretation of the Hon';ble Supreme Court in Raja Mohammad Amir Ahmad Khan v. Municipal Board of Sitapur AIR 1965 SC 1923. At page 1929, the interpretation and true meaning of the words "belonging to me" occurring in a deed was taken up by the Hon';ble Supreme Court for discussion and consideration. It was argued that the words would amount to asserting the full ownership rights by a tenant and thus denoted repudiation of landlord';s title. The Hon';ble Supreme Court, repelling that contention, held the following : "(14) Now to revert to paragraphs 2, 5 and 8 which the learned Judges considered amounted to a clear and unequivocal denial of the Government';s title, they referred in para 2 to the words ';belonging to me'; as constituting a disclaimer of the tenancy and a repudiation of the landlord';s title. We do not agree that this is the only or proper construction which the words are capa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y sub-leasing it to others for construction of houses the municipality had come in and asserted rights in denial of these claims. It is with that background that one has to judge as to whether when the tenant stated that the land ';belonged to him'; he was asserting merely the substantial character of his interest in the property or was disclaiming the reversionary interests of Government or its right to demand and receive a fixed rent in respect of the property. We consider that the words employed did not, in the circumstances, amount to a disclaimer or a renunciation of the tenancy". [Emphasis supplied] Therefore, it is clear from the above decision of the Hon';ble Supreme Court that "belonging to" does not denote absolute title. Even possession of an interest less than that of full ownership could be signified by those words. Therefore, from the above, it is clear that for an asset belonging to the company need not necessarily mean that the assessee should be full owner of that asset. It also includes the possession of an interest less than that of full ownership. After going through the various important clauses of the lease deed, we have no hesitati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s delivered on 9-12-1994. However, the Bombay Tribunal decision itself was not even referred to in their order at least to the limited extent of considering whether the provisions of section 40 of the Finance Act is a self-contained code or not. The above discussion makes it clear that the earlier decision of the Tribunal for assessment years 1988-89 and 1989-90 was against the interpretation of the words "belonging to" by the Hon';ble Supreme Court in Raja Mohammad Amir Ahmad Khan';s case (supra). Further, in the case of A.M Bhiwandiwalla (supra), the. E-Bench of the Bombay Tribunal had taken a view that the interest of the assessee in a land leased for 98 years in its favour should be considered as the wealth of the assessee under section 40 of the Finance Act. At para 8 of the decision, the following is what is held by the Tribunal: "8. We have considered the rival submissions. From the facts already noted above it is evident that the value of the leasehold rights in the land in question had been included in the assessee';s wealth in the past. It is the accepted position that the assessee has obtained lease of this land for a period of 99 years. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empt to argue in what way the earlier order of the Tribunal should not be applied for the assessment year 1990-91 also as regards the valuation of this property. Section 114(g) of the Evidence Act is as follows : "(g) that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it;" It is obvious that since the assessee is the lessee of this property, it should have been in possession of the registered lease deed concerning this property also which is stated to be a lease for 93 years. No reasons are assigned as to why it was not produced before us. Therefore, we feel that it is quite justifiable to draw an adverse inference against the assessee and we hold that if really the lease deed is produced before us, it would be unfavourable to the assessee or the provisions of the said lease deed do not in any way support any of the contentions of the assessee. Therefore, since no arguments worth the name were addressed on this issue and having regard to the earlier orders of the Tribunal fixing the value of this property at ₹ 1,75,00,000 for the earlier years and since the assessee was not able to produce anything to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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