M/s.K.N.Chari Rubber & Plastics Pvt. Ltd.,Madras.18 v. The Commissioner of Income Tax,Tamilnadu-I, Madras

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 20.06.2006Coram :THE HONOURABLE MR.JUSTICE P.D.DINAKARANANDTHE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJATax Case (Reference) No.149 of 2000 Reference No.94/2000M/s.K.N.Chari Rubber & Plastics Pvt. Ltd.,Madras.18...ApplicantVsThe Commissioner of Income Tax, Tamilnadu-I, Madras. ..RespondentReference under Section 27(1) of the Income Tax Act, 1957 by IncomeTax Appellate Tribunal, Madras, 'D' Bench in W.T.A. No.1096(Mds)/1993 forthe assessment year 1989-90 against the order of The Commissioner of Income Tax (Appeals) V, Madras-600034, against the order of the AssistantCommissioner, Company Circle - I(4), Madras. For Applicant : No appearanceFor Respondent : Mrs. Pushya Sitaraman Sr.Standing Counsel for Income Tax Dept. JUDGMENT(Judgment of the Court was delivered by P.P.S.Janarthana Raja, J.)Income Tax Appellate Tribunal, Madras, 'D' Bench, referred thematter under Section 27(1) of the Income Tax Act at the instance of theassessee, for opinion of this Court, raising the following questions oflaw: "

Whether the Tribunal was right in holding that thevalues of the motor cars, land at Pallikaranai Villageand factory building at Avadi are includible in the netwealth of the appellant company despite the fact thatall of them were acquired out of own funds of theappellant company and such inclusion is against theintention of the legislature reflected in the speech of https://hcservices.ecourts.gov.in/hcservices/ the Hon'ble Finance Minister while introducing the Finance Bill 1983?2. Whether the Tribunal was right in holding thatexpression 'Motor Cars' occuring in Section 40(3)(vii)of the Finance Act, 1983 leaves no ambiguity ininterpretation and as such, motor cars forming part of Plant & machinery in the block of assets fordepreciation under Sec.32 of the I.T. Act, 1961, aspart of the Plant & Machinery, should be construed asmotor cars simpliciter as specified for the purpose ofsection 40(3) (vii) of the Finance Act, 1983?3. Whether the Tribunal was right in holding that thefactory building at Avadi cannot be treated as businessasset, used for the purpose of business of theappellant company and the value thereof is includiblein the net wealth of the appellant company as perinterpretation of Section 40(3) (vi) of the FinanceAct, 1983 in the facts and circumstances of the case?"

The brief facts of the case arising out of the above questionsof law are as under: The assessee is a closely held private limited company. In thewealth tax return relevant for the assessment year under consideration, the assessee declared its net wealth excluding the value of motor cars, vacant land at Pallikaranai Village and the land and building at Avadi. The assessee contended that the motor car being a plant and machinery onwhich depreciation was allowed in the Income Tax proceedings, the same isnot specified under the provisions of Section 40(3) of the Finance Act,1983. Similarly, in respect of the land and building at Avadi, it wasclaimed that it was a business asset and hence will not be liable towealth tax. As regards the vacant land at Pallikaranai Village, theassessee contended that certain loans have been raised against thisproperty and therefore, the liabilities have to be given due considerationwhile arriving at the value of the property. The Assessing Officer did notagree with the contentions of the assessee and disallowed the claims ofthe assessee. Aggrieved by the order of the Assessing Officer, theassessee filed an appeal before the Commissioner of Income Tax (Appeals).The C.I.T.(A) dismissed the appeal and confirmed the order of the Assessing Officer. Aggrieved by the order, the assessee filed an appealbefore the Income Tax Appellate Tribunal. The Income Tax AppellateTribunal followed the assessee's own case for the earlier assessment yearand held that the wealth tax had been rightly levied on these assets.

Though there was service of notice, there is no representation onbehalf of the assessee. https://hcservices.ecourts.gov.in/hcservices/

We find that the issue stands covered by this Court judgmentreported in 260 ITR 164 in the assessee's own case, wherein it was heldthat the assessee is liable to wealth tax on the assets as stated above. Hence, we find no error or infirmity in the order of the Income TaxAppellate Tribunal and we answer the questions of law in favour of the Revenue and against the assessee. No costs. kmSd/Asst. Registrar/true copy/Sub Asst. RegistrarTo1. The Assistant Registrar, Income Tax Appellate Tribunal, Madras Bench - 'D',Rajaji Bhavan, Besant Nagar, Chennai-90. (5 copies)2. The Secretary, Central Board of Direct Taxes, New Delhi (3 Copies)3. The Commissioner of Income Tax (Appeals)V,Madras-34.4. The Assistant Commissioner, Company Circle - I(4),Madras.

The Commissioner of Income Tax, Tamil Nadu - I, Madras.1 cc To Mrs. Pushya Sitaraman, Sr.S.G.SC, SR.25967. Tax Case (Reference) No.149 of 2000GV(CO)RVL 05.07.2006