Oswal Chemicals And Fertilisers ... vs Commissioner Of Wealth Tax
2005 Latest Caselaw 164 Del

JUDGMENT

Swatanter Kumar, J.

1. The Income Tax Appellate Tribunal vide order dated 7.5.2004 dismissed appeals preferred by the assessed in relation to the assessment years 1993-94 to 1998-99 while allowing partially the appeal for the assessment year 1999-2000 by remanding the issue in regard to valuation of car in question as on 31.3.1999. The assessed has impugned this order of the Appellate Tribunal in the afore-stated appeals for the respective assessment years. Thus it will be appropriate to dispose of all these seven Wealth Tax Appeals by a common order.

2. The facts giving rise to the present appeals are that in the statement annexed with the return the assessed had given a note that WDVs of the cars does not include the value of Rs.131 lacs for the imported car purchased from Shri Lalit Kumar Bagla knowing that some dispute is pending before the Delhi High Court. The assessed before the Assessing Officer vide his letter dated 5.3.1999 stated that a Rolls Royce Car was purchased by the assessed from said Shri Bagla for an amount of Rs.131 lacs and the company made payment to him and also took possession of the car. According to the assessed since the ownership of the car was being disputed and the car has not been registered in the name of the assessed company under the Motor Vehicles Act, the value of the car is not liable to be included in net wealth of the assessed under Section 2 (ea) of the Wealth Tax Act, 1957 (hereinafter referred to as the 'Act'). This plea of the assessed was not accepted by the Assessing Officer who added the value of the car in the net wealth of the assessed for the relevant assessment years. Against this order the appeal was filed by the assessed before the Commissioner, Wealth Tax (Appeal) who by a detailed order and after taking note of the facts and directions contained in the judgment of the High Court dated 19.1.1995 passed in Suit No. 1477/94 sustained the order of the assessing authority. The assessing authority as well as the appellate authority after noticing the facts of the suit in detail came to the conclusion that the dispute between the parties did not relate to the ownership of the car but merely related to the balance payment of Rs.69 lacs as according to Shri Bagla the value of the car was Rs.2 crores while the assessed had only paid him Rs.131 lacs thus leaving the balance of Rs.69 lacs.

3. It is noticed that the facts which are undisputed even before us are that a Rolls Royce car of 1986 model bearing Chassis No. 156020 was purchased by the assessed for a sum of Rs.131 lacs from Shri Bagla. This car was duly registered in favor of the assessed. Subsequently another car of 1988 model metallic blue Rolls Royce (Chassis No. 24457) was purchased and the original car was returned to Shri Bagla and some documents were executed. However, the vehicle was not registered in the name of the assessed under the provisions of the Motor Vehicles Act as according to Shri Bagla the balance consideration of Rs.69 lacs was not remitted to him. In light of these facts the Appellate Tribunal came to the following conclusions:

"10. Having regard to the principles enunciated in the aforesaid decisions, we have no hesitation to hold that Id. CWT (A) is justified on facts and in law in sustaining the inclusion of the value of the imported car in the net wealth of the assessed for the assessment years under reference. A motor vehicle is a movable property. The transfer of ownership of the vehicle is governed by the Sale of Goods Act, 1939. The transfer takes effect from the date of sale. As between the transfer and the transferee, the sale is complete even before the transfer is effected in the registratio certificate. In the instant case, there is no dispute whatsoever regarding the sale of the Imported car. In pursuance of the sale, delivery has been handed over by the seller to the assessed company and the car has been got insured by the assessed company and is being used for its business purpose. We are inclined to concur with the finding of the ld. CWT (A) that the dispute pending before the Hon'ble Delhi High Court is not regarding the ownership of the car, the dispute is only with regard to the fact whether, consideration has been fully paid by the assessed or not. Such a dispute has no relevant whatsoever in so far as the ownership of the car vesting with the assessed is concerned, For the aforesaid reasons, we would accordingly dismiss the common ground involved in these appeals and uphold the order of the Id. CWT (A) on the issue.

11. In so far as, ITA No.8-2002 relating to assessment year 1999-2000 is concerned there is one more issue raised by the assessed involving the adoption of the value of car at Rs.1 crore by the tax authorities. According to the assessed, Assessing Officer has not allowed any opportunity to the assessed to establish that fair market value of the car as on 31.3.1999 would not exceed Rs.50 lakhs. It appears to us that the Assessing Offier has proceeded to adopt the value of the car at Rs.1 crore on the ground that assessed has not filed any valuation report and insurance cover in respect of this car and further that WDV of the car cannot be the basis of the value of the car. While upholding the valuation at Rs.1 crore, CWT (A) has taken note of the fact that book value of the car has been shown as Rs.88.55 lacs whereas car was purchased for Rs.1.31 crore. Looking to the facts of the case it appears to us that the grievance of the assessed regarding lack of opportunity by the Assessing Officer during wealth-tax assessment for assessment year 1999-2000 appears to have some merit and therefore, we would restore the issue regarding valuation of car as on 31.3.1999 to the Assessing Officer with the direction that proper opportunity be allowed to the assessed on the issue before taking a decision on the merit. Thus, Ground No.4 for assessment year 1999-2000 is restored to the Assessing Officer for fresh adjudication.

12. In the result, appeals of the assessed for assessment years 1993-94 to 1998-99 are dismissed whereas appeal for assessment year 1999-2000 is partly allowed as above."

4. Learned counsel appearing for the assessed argued that the car does not belong to the assessed and as such could not be treated as a component or an asset of net wealth of the assessed. The orders passed by the Wealth Tax Authorities under the provisions of the Act thus suffer from an error apparent on the face of the record. Further it is contended that following substantial questions of law arise in the present case:

1. Whether on the true and correct interpretation of the provisions of Section 2 (ea) read with Section 3 and Section 2(m) of the Wealth Tax Act, 1957 and in the facts and circumstances of the case, the Income Tax Appellate Tribunal was correct in holding, that the assessed company was owner of a Rolls Royce car (1988 model, chassis no.24457, registration no.DEU-1), which belonged to it and the value is thereof liable to be included in the net wealth in the assessment of the assessed-company for wealth-tax purposes?

2. Whether, the Income Tax Appellate Tribunal was correct in law and on facts in sustaining the inclusion of Rs.1,17,59,017/- being the WDV of the car in the net wealth of the assessed?

3. Whether, the Income Tax Appellate Tribunal was correct in law and on facts in holding that the assessed is the owner of the car even though the dispute with regard to ownership of the said car was pending before the Hon'ble High Court?

4. Whether the order of the Income Tax Appellate Tribunal is not vitiated in law for non-consideration of relevant material and evidence placed on record and submissions made by the assessed?

5. We are unable to find any merit in the contentions raised on behalf of the petitioner. In our opinion, in the facts and circumstances of the case, no question of law much less a substantial question of law arises for consideration of the Court in the present appeal as contemplated under Section 27A(2) of the Act. As already noticed the facts in the present case are hardly of any dispute. The petitioner in the suit pending before the High Court and even before the authorities concerned has claimed ownership of the car in question. The dispute primarily relates to the valuation of the car i.e. the claim of Rs.69 lacs by Shri Bagla the plaintiff in the present suit against the assessed defendant. In fact, even the value of the car has admittedly been shown as Rs.131 lacs. Once the assessed himself claimed to be the owner of the car the possession of which is admitted, in fact, the assessed would be estopped from taking a plea to the contrary. The assessed can also not be permitted to take shelter under the provisions of the Act to evade payment of wealth tax.

6. A Division Bench of this Court in the case of Commissioner of Income-Tax v. S.R. Fragnances Ltd., 270 (2004) ITR 560 while relying upon the judgment of the Supreme Court in the case of Santosh Hazari v. Purushottam Tiwari, " Although the expression "substantial question of law" is not defined in the Act or any other statute where a similar expression appears its true meaning and connotation is now well settled by various judicial pronouncements. Recently in Santosh Hazari v. Purushottam Tiwari , while dealing with an analogous provision contained in section 100 of the Code of Civil Procedure, their Lordships of the Supreme Court have observed that to determine whether a question of law raised in a case is a "substantial question of law", the tests laid down by the Constitution Bench in Chunilal V. Mehta and Sons Ltd. (Sir) v. Century Spinning and Manufacturing Company Ltd, , still hold good. The five tests so laid are: whether (i) it is of general public importance; or (ii) it directly or substantially affects the rights of the parties; or (iii) it is an open question in the sense that it is not finally settled by the Supreme Court; or (iv) it is not free from difficulty; and (v) it calls for discussion of alternative views."

7. In view of the above enunciated principle of law before a notice could be issued by this Court in appeal under Section 27A of the Act an appellant essentially must satisfy the Court that the appeal raises a substantial question of law. In the present case as already noticed it is clear from the undisputed facts that the car is in possession of the assessed who has already, according to his own case, paid the entire sale consideration. The documents have been executed, however the vehicle has not been registered in the name of the assessed under the provisions of the Motor Vehicles Act. The view taken by the Appellate Tribunal, in any case, is not contrary to the spirit of the Act. On a plain reading of Section 2(a) and 2(ea) read with Section 3 of the Act which is a charging section we are of the view that the conclusons of the Appellate Tribunal do not suffer from patent error of law. Its approach cannot be said to be perverse even upon appreciation of documentary evidence produced before the Tribunal. The questions proposed do not raise question of public importance, it raises no difficulty and there is no occasion for discussion of the alternative views, in the facts and circumstances of the case.

8. Learned counsel appearing for the appellant while relying upon the judgment in the case of Commissioner of Income-Tax, Punjab v. Jai Parkash Om Parkash Company Ltd., 52 (1964) ITR 23 argued that the framed question of law in the present appeal requires consideration, the Court should issue notice and not answer the questions of law at the admission stage itself. We are afraid this judgment is of no help to the petitioner in view of the admitted facts as afore-referred. In that case the Court was concerned with the provisions of Section 66 (2) of the Income Tax Act where the High Court would consider an application for a direction to the Tribunal to state a case and refer a question of law arising out of the order. In the present case the Court itself has to consider whether the appeal raises any substantial question of law relative to the facts of the case. We may also notice that even in the appeal it is no where disputed by the assessed that he is not owner of the car, has not paid the full consideration and is not in possession of the moveable property. Even the valuation of the car to the extent of Rs.131 lacs is admitted. The order was passed by the Assessing Authority after affording opportunity to the appellant and applying its mind to the documents placed on record including the order of the High Court dated 19.1.1995 which admittedly has attained finality between the parties during the pendency of the suit.

9. We find no merit in these appeals and the same are dismissed in liming.