2019 (3) TMI 296 - HC - Wealth-tax

Assessment of wealth tax on building & appeal limits under Income Tax Act: authorities' discretion & litigation policy.

The judgment addressed issues concerning the assessment of wealth tax on a partially constructed building, monetary limits for filing appeals under the ... Maintainability of appeal - monetary limit - existence of substantial question of law - whether the appeal has to be considered on merits without being hindered by the monetary limits if it involves a substantial question of law of importance and such question arises repeatedly? - HELD THAT:- the question of law has now been settled by the Honourable Supreme Court [2016 (1) TMI 826 - SUPREME COURT OF INDIA]. Repeated instances of such question of law arising does not arise at all, since the Wealth Tax Act is no more in force. The extant litigation policy which restrains the Department from taking up any appeal under Section 260A; if the demand is less than Rupees Fifty Lakhs. Considering the overall circumstances of the assessee having expired in the year 2010, the refund orders as per the order of the Tribunal having been issued, and also that the monetary limit is less than that prescribed under Annexure-D circular, we are of the opinion that though the question of law has to be answered in favour of the Revenue and against the assessee, there need be no recovery steps taken for reason of the appeals being below the monetary limit at the time of filing of the appeals itself. These appeals are hence closed with the above observations Issues:1. Assessment of partially constructed building for wealth tax.2. Monetary limit for filing appeals under Section 260A of the Income Tax Act, 1961.3. Discretion of authorities to consider appeals based on substantial questions of law.4. Application of extant litigation policy on appeal filing.Issue 1: Assessment of partially constructed building for wealth taxThe main issue in the judgment was whether a partially constructed building should be assessed for wealth tax. The Supreme Court decision in Giridhar G. Yadalam v. Commissioner of Wealth Tax and Another was cited, where it was held that partially constructed buildings must be included in the computation of wealth tax.Issue 2: Monetary limit for filing appeals under Section 260AThe judgment discussed the circular at Annexure-D, which set a monetary limit of Rs. 4 lakhs for appeals under Section 260A of the Income Tax Act, 1961. It was clarified that the limit applied to individual appeals and not collective demands in various assessment years. Even though individual appeals raised a lesser amount, the total liability in all assessment years was slightly above Rs. 6 lakhs. The circular also provided discretion to authorities to consider appeals beyond the monetary limits if they involved substantial questions of law of importance, which in this case, did not arise repeatedly.Issue 3: Discretion of authorities on substantial questions of lawThe judgment highlighted the discretion of authorities to decide whether to consider appeals on merits despite monetary limits if they involved substantial questions of law. However, in this case, since the question of law had been settled by the Supreme Court and did not arise repeatedly due to the Wealth Tax Act being no longer in force, recovery steps were not necessary even though the question of law favored the Revenue against the assessee.Issue 4: Application of extant litigation policyThe judgment also considered the extant litigation policy, which prevented the Department from pursuing appeals under Section 260A if the demand was less than Rs. 50 lakhs. Given the circumstances of the case, including the assessee's passing in 2010, issuance of refund orders by the Tribunal, and the monetary limit being lower than prescribed under the circular, the appeals were closed without any recovery steps, despite the question of law being decided in favor of the Revenue.In conclusion, the judgment addressed various issues related to the assessment of wealth tax on a partially constructed building, the monetary limits for filing appeals under the Income Tax Act, the discretion of authorities on substantial questions of law, and the application of the extant litigation policy. The decision favored the Revenue in terms of the question of law but concluded that no recovery steps were necessary due to the appeals being below the monetary limit at the time of filing.