Mohandas Isardas Chatlani vs Ito (International ...
2021 Latest Caselaw 10711 Bom

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                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                     ORDINARY ORIGINAL CIVIL JURISDICTION
                             WRIT PETITION NO.2660 OF 2019
  Mohandas Isardas Chatlani                         )
  601, Rizvi Heights, Pitamber Lane,                )
  Behind Paradise Cinema,                           )
  Mahim, Mumbai - 400 016                           ) ....Petitioner
                   V/s.
  1. ITO (International Taxation - 2 (1) (1) )
  17th Floor, Air India Building,            )
  Nariman Point, Mumbai - 400 021            )
  2. Additional Commissioner of Income              )
  Tax (International Taxation) - 2 (1)              )
  17th Floor, Air India Building,                   )
  Nariman Point, Mumbai - 400 021                   )
  3. Commissioner of Income                     Tax )
  (International Taxation) - 2                      )
  17th Floor, Air India Building,                   )
  Nariman Point, Mumbai - 400 021.                  )
  4. Union of India                                 )
  Aaykar Bhavan,                                    )
  M.K. Road, Mumbai - 400 020.                      ) ....Respondents
                              WRIT PETITION NO.2662 OF 2019
  Mohandas Isardas Chatlani                         )
  601, Rizvi Heights, Pitamber Lane,                )
  Behind Paradise Cinema,                           )
  Mahim, Mumbai - 400 016                           ) ....Petitioner
                   V/s.
  1. ITO (International Taxation - 2 (1) (1) )
  17th Floor, Air India Building,            )
  Nariman Point, Mumbai - 400 021            )
  2. Additional Commissioner of Income              )
  Tax (International Taxation) - 2 (1)              )
  17th Floor, Air India Building,                   )
  Nariman Point, Mumbai - 400 021                   )
  3. Commissioner of Income                     Tax )
  (International Taxation) - 2                      )
  17th Floor, Air India Building,                   )

Gauri Gaekwad




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  Nariman Point, Mumbai - 400 021.                         )
  4. Union of India                                        )
  Aaykar Bhavan,                                           )
  M.K. Road, Mumbai - 400 020.                             ) ....Respondents
                              WRIT PETITION NO.2664 OF 2019
  Mohandas Isardas Chatlani                                )
  601, Rizvi Heights, Pitamber Lane,                       )
  Behind Paradise Cinema,                                  )
  Mahim, Mumbai - 400 016                                  ) ....Petitioner
                   V/s.
  1. ITO (International Taxation - 2 (1) (1) )
  17th Floor, Air India Building,            )
  Nariman Point, Mumbai - 400 021            )
  2. Additional Commissioner of Income                     )
  Tax (International Taxation) - 2 (1)                     )
  17th Floor, Air India Building,                          )
  Nariman Point, Mumbai - 400 021                          )
  3. Commissioner of Income                            Tax )
  (International Taxation) - 2                             )
  17th Floor, Air India Building,                          )
  Nariman Point, Mumbai - 400 021.                         )
  4. Union of India                                        )
  Aaykar Bhavan,                                           )
  M.K. Road, Mumbai - 400 020.                             ) ....Respondents
                              WRIT PETITION NO.2661 OF 2019
  Mohandas Isardas Chatlani                                )
  601, Rizvi Heights, Pitamber Lane,                       )
  Behind Paradise Cinema,                                  )
  Mahim, Mumbai - 400 016                                  ) ....Petitioner
                   V/s.
  1. ITO (International Taxation - 2 (1) (1) )
  17th Floor, Air India Building,            )
  Nariman Point, Mumbai - 400 021            )
  2. Additional Commissioner of Income                     )
  Tax (International Taxation) - 2 (1)                     )
  17th Floor, Air India Building,                          )
  Nariman Point, Mumbai - 400 021                          )
  3.      Commissioner            of    Income         Tax )

Gauri Gaekwad




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    (International Taxation) - 2                   )
    17th Floor, Air India Building,                )
    Nariman Point, Mumbai - 400 021.               )
    4. Union of India                              )
    Aaykar Bhavan,                                 )
    M.K. Road, Mumbai - 400 020.                   ) ....Respondents
                                           ----

Mr. Pankaj Toprani a/w. Ms. Krupa Toprani i/b. PRH Juris Consults for petitioner in all petitions.

Ms. Ranjita Kumari i/b. Mr. Charanjeet Chanderpal for respondents in all petitions.

----

CORAM : K.R.SHRIRAM, & ABHAY AHUJA, JJ DATED : 10th AUGUST 2021

ORAL JUDGMENT : (PER K.R. SHRIRAM, J.)

1 Rule. Considering the nature of the petitions and the fact that it

was listed on 10th October 2019, 21st November 2019 and 5th December

2019, Rule made returnable forthwith.

2 On 5th December 2019 learned counsel for respondents sought

time to take instructions and file an affidavit in reply, if necessary. Till date

no reply has been filed. Mr. Toprani states that even he has not been served

a copy of any such reply. Ms. Ranjita Kumari states that no reply has been

filed.

3 There are four petitions filed by petitioner in which petitioner is

seeking Writ of Mandamus or Writ in the nature of Mandamus and for a

direction to respondents to refund various amounts, viz., for Assessment

Year 2006-2007 refund sought is Rs.2,67,215, Assessment Year 2007-2008

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refund sought is Rs.3,46,392/-, Assessment Year 2008-2009 refund sought

is Rs.4,77,274/- and Assessment Year 2009-2010 refund sought is

Rs.4,58,766/-.

4 Petitioner, who according to petition, in 2019 was 90 years old

owned various properties. Petitioner owned commercial properties at

Chennai and Mumbai. Those properties petitioner had given on leave and

license and was earning compensation which was his source of income. The

compensation earned have been disclosed in the income tax returns and

income tax has been paid.

5 Respondent no.1, by an order dated 24 th December 2009 passed

under Section 16 (5) read with Section 17 of the Wealth Tax Act, 1957 (the

Act), for Assessment Year 2005-2006 assessed petitioner to wealth tax for

immovable property in the sum of Rs.2,08,39,500/-. After giving

Rs.15 lakhs as basic exemption, the net wealth, according to the Wealth Tax

Officer, that was liable for wealth tax was Rs.1,93,39,500/-.

This order was passed notwithstanding petitioner's explanation

that these were commercial properties and exempted under the definition

of asset under Section 2 (ea) of the Act. This submission of petitioner was

rejected on the grounds that these commercial properties were not used by

petitioner for his own business and therefore, form a part of the total

wealth of petitioner. As such, the total wealth of these commercial

properties was liable to wealth tax.

Gauri Gaekwad





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6                       Against this order, petitioner preferred an appeal being Appeal

No.CIT(A)-10/WTO(IT)1(1)/IT-134/09-10, before the Commissioner of

Income Tax (Appeals) - 10, Mumbai. The Appellate Authority, after

considering the provisions of the Act and after hearing petitioner, was

satisfied that petitioner was correct and the Assessing Officer was not

correct and by an order dated 8 th July 2010 set aside the order of the

Assessing Officer. The Appellate Authority rightly concluded that the

Assessing Officer's finding that these commercial properties should be used

by appellant in his own business otherwise would form a part of the total

wealth of petitioner was erroneous.

7 We endorse the view of the Appellate Authority. Section 2 (ea)

of the Act reads as under :

"Therefore these commercial establishments or complexes are covered by exclusion clause of section 2 (ea) (i) (5) which reads as under :

2 (ea) “assets”, in relation to the assessment year commencing onassets”, in relation to the assessment year commencing on, in relation to the assessment year commencing on the 1st day of April, 1993, or any subsequent assessment year, means -

(i) any building or land appurtenant thereto (hereinafter referred to as “assets”, in relation to the assessment year commencing onhouse”, in relation to the assessment year commencing on), 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 Corportation or by any other name) or a Cantonment Board, but does not include -

(1) ........

(2) ........

(3) ........

(4) ........

(5) any property in the nature of commercial establishments

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or complexes".

The exemption is to any property in the nature of commercial

establishments or complexes and it does not provide anywhere that such

commercial properties should be used by assessee for his own purpose.

8 Before the Appellate Authority passed the order dated 8 th July

2010, in view of the order passed by the Wealth Tax Officer for Assessment

Year 2005-2006, petitioner had paid the following amounts :

                Sr. No.    Date of payment          A.Y.         Wealth-Tax paid
                   1           19.01.2010          2006-07          Rs.2,67,215
                   2           19.01.2010          2007-08          Rs.3,46,392
                   3           19.01.2010          2008-09          Rs.3,72,822
                               22.01.2010          2008-09          Rs.1,04,452
                   4           19.01.2010          2009-10          Rs.3,49,186
                               22.01.2010          2009-10          Rs.1,09,580
                          Total Wealth Tax Refund                  Rs.15,49,647

Writ Petition No.2664 of 2019 pertains to Assessment Year

2006-2007, Writ Petition No.2660 of 2019 pertains to Assessment Year

2007-2008, Writ Petition No.2661 of 2019 pertains to Assessment Year

2008-2009 and Writ Petition No.2662 of 2019 pertains to Assessment Year

2009-2010.

9 Petitioner, therefore, by his letter dated 5 th December 2011

forwarded to the Income Tax Officer, I.T.O. (I.T.) - 1 (1), Mumbai, a copy of

the order dated 8th July 2010 passed by the Appellate Authority and sought

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refund of the wealth tax amount of Rs.15,49,647/- paid. As no response

was received, a grievance application on 6th May 2016 was filed to the

Director of Income Tax, International Taxation, Mumbai. To this letter also

there was no response. The Chartered Accountant of petitioner later

addressed a communication in the form of a reminder on 15 th June 2018.

Petitioner then sent a reminder dated 27 th March 2019 that was delivered

on 11th April 2019.

10 By a letter dated 3rd May 2019 the Income Tax Officer

(International Taxation) responded to reminder letter dated 15 th June 2018

and informed petitioner for the first time that his request for refund of

wealth tax paid for A.Y. 2006-2007 to 2009-2010 cannot be entertained as

each wealth tax assessment year is separate assessment year and it is also

separate proceedings for each year. According to the Income Tax Officer

(International Taxation), the cognisance of the Appellate Authority order for

A.Y. 2005-2006 dated 8th July 2010 cannot be straightaway taken for A.Y.

2006-2007 to 2009-2010 unless appeals were filed by appellant before the

Appellate Authority and orders have been passed therein. In our view, this is

the most unreasonable and illogical view any officer of the Income Tax

Department could take.

11 Mr. Toprani correctly submitted that the Income Tax Officer

(International Taxation) should have first passed assessment orders for the

years 2006-2007 to 2009-2010, which orders have not been passed, and Gauri Gaekwad

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therefore, the question of filing any appeal and obtaining separate order for

each year would not arise. In any event, the commercial premises are the

same. Wealth tax was assessed for A.Y. 2005-2006 erroneously on these

commercial properties and such an assessment was erroneous has been

confirmed by the Appellate Authority. Hence, such a stand taken by the

Income Tax Officer (International Taxation), i.e., respondent no.1, in our

view defies sensibility.

12 It is not respondents' case that the order passed by the

Appellate Authority has been stayed or set aside or any appeal impugning

the same has been filed.

We would ofcourse hasten to repeat what we have stated

earlier that the view expressed by the Appellate Authority in its order dated

8th July 2010 in Appeal No.CIT(A)-10/WTO(IT)1(1)/IT-134/09-10 has our

endorsement.

13 In the circumstances, rule in terms of prayer clause - (a) in all

the petitions is made absolute.

14 Respondents are directed to refund the amounts paid, as

mentioned in these four petitions, after verifying their records, together

with interest, if any, payable in accordance with law within four weeks from

today. If there are no provisions for payment of interest, then interest shall

become payable at 12% p.a. on the amounts due after expiry of four weeks.

15                All four petitions disposed.
Gauri Gaekwad





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16                All to act on authenticated copy of this order. Respondents shall

not insist on certified copy for releasing the payments.

(ABHAY AHUJA, J.)                                               (K.R. SHRIRAM, J.)




Gauri Gaekwad