High Court Of Madhya Pradesh : Indore Bench
Commissioner Of Wealth Tax vs. Kalani Industries (P) Ltd.
Section FA 1983 40(2). FA 1983 40(3)
Asst. Year 1989-90
S.K. Kulshreshtha & Ashok Kumar Tiwari, JJ.
WT Appeal No. 115 of 1999
8th September, 2005
Counsel Appeared :
R.L. Jain with Ms. Veena Mandlik, for the Appellants : S.C. Bagadiya with Sudhanshu Vyas, for the Respondent
ORDER
S.K. Kulshreshtha, J. :
The CWT, Indore, has filed this appeal under s. 27A of the WT Act, 1957 which has been admitted on the following substantial question of law :
“Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that deduction of the liability to the tune of Rs. 12 lakhs being security deposit against the property let out was allowable even after giving a specific finding that assessee did not owe any loan or debt in relation to the property let out and in the face, the specific provisions of s. 40(2) of the Finance Act, 1983 whereby only those debts can be allowed which are secured on or which have been incurred in relation to assets upon which the wealth-tax is chargeable as per sub-s. (3) of the said s. 40 of the Finance Act, 1983 ?”
The assessment pertains to the year 1989-90. The assessee is a private limited company. It filed its return of wealth for the said assessment year on 29th Dec., 1989 declaring net wealth of Rs. 20,42,896. During course of assessment proceedings, the AO noticed that the assessee had entered into an agreement with the Banque Nationale De Paris vide agreement dt. 7th March, 1988 according to which the assessee-company had permitted the said Banque to use the licensed premises on the terms and conditions contained in the agreement. Under the said agreement, the assessee-company had received a sum of Rs. 12 lakhs without interest subject to its refund when the licensee vacates the premises. Accordingly the said amount was shown as liability and deduction of the same was claimed while determining the net wealth. The AO rejected the claim and treated the same as deposits for the right to use the premises on the ground that the liability is allowable where the value of the assets represent any loan or debt, the assessee was not entitled to any deduction.
The order of AO was challenged before the CWT(A), who rejected this appeal relying upon the decision of the Supreme Court in the case of CIT vs. J.K. Cotton Manufacturers Ltd. (1984) 39 CTR (SC) 158 : (1984) 146 ITR 552 (SC). On further appeal, however, the Tribunal, Indore, by its impugned order allowed the appeal and hence the Revenue has preferred the above appeal to dispose.
Learned counsel for assessee has raised a preliminary objection on the basis of the decision of the apex Court in CIT vs. Smt. Sarita Aggarwal & Anr. (2001) 167 CTR (SC) 105 : AIR 2001 SCW 4780. In the said decision, their Lordships have observed that when earlier decisions of the Tribunal were not challenged, it was not permissible to the Revenue to assail the subsequent decision on the same point.
Learned counsel contends that in the present case it is not disputed that in the succeeding year the authority has accepted the deduction of the amount and, therefore, for the uniformity in the assessment the Department is bound to allow the deduction of the amount notwithstanding that every assessment year is a separate assessment year.
The argument of learned counsel suffer from a patent fallacy. It ignores the fact that in the present case it is not in the earlier period that the allowance has been given, but in the subsequent assessment years. For the assessment year to which the appeal relates, it has not been shown that the assessment subsequently filed had come into existence at the time when the matter pertaining to the order in question was considered. Thus, while it is true that for consistency the past assessment may be considered as relevant, the converse is not true. However, in the present case, there are other facts and circumstances which ordain deduction of the amount as claimed by the assessee. The Tribunal has duly recorded that in view of the consent decree of the Bombay High Court the said claim has been allowed by the CWT(A) and, therefore, the assessee cannot be denied the benefit for the past years. Accordingly, the Tribunal opined that the said deposit of Rs. 12 lakhs should be treated as a liability in the assessment year in question against the assets of the assessee and the AO should allow deduction of the liability of Rs. 12 lakhs from the net wealth of the assessee.
In view of the position, thus emerging, we are of the opinion that Tribunal was justified in holding that deduction of the liability to the tune of Rs. 12 lakhs being security deposit against the property let out was allowable.
The question is, therefore, decided against the appellant and in favour of the respondentassessee. The appeal is, accordingly, dismissed with no order as to costs.
[Citation : 286 ITR 425]
