TaxTMI 
TaxTMI 
2002 (7) TMI 58
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....as paid during the year ended on March 31, 1987. The intending purchaser, however, obtained possession of the land for the purpose of construction of a multi-storied building on the said land. The conveyance of the property had not been executed, however, the purchaser took steps for construction of the multi-storied building after obtaining possession. The assessment year involved in this reference is 1987-88, and the relevant valuation date is March 31, 1987. The Revenue has never disputed the valuation of the said property. The valuation of the said property is Rs. 3 crores. It was contended by the assessee before the Assessing Officer that the sum of Rs. 50 lakhs paid by the intending purchaser should be deducted as a liability from the said sum of Rs. 3 crores. Under the said agreement for sale dated September 22, 1986, the assessee was to receive the total sale consideration of Rs. 3 crores in several instalments. The assessee received Rs. 50 lakhs from the said Satyam Properties and Finance Pvt. Ltd., during the year ended on March 31, 1987. The dates of payments of the said sum of Rs. 50 lakhs were as follows Date of payment Amount 8-10-1986 &....
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....er the Finance Act, 1983, the levy of wealth-tax was revived in the case of closely held companies which are those companies in which the public were not substantially interested. Such companies were brought under the cover of the wealth-tax in respect of net wealth of certain specified assets owned by such companies. All the assets owned by such companies were not subjected to wealth-tax but only net wealth of the specified assets which were invested in non-productive activities were subjected to such tax. In the present case, the assessee has not, however, disputed that it is liable to wealth-tax in terms of section 40 of the Finance Act, 1983, in respect of the said property, namely, 3, Alipore Road. On a simple approach it appears that the assessee is a company and the public are not substantially interested in the said company and the said property falls within the assets specified under sub-section (3) of section 40 of the Finance Act, 1983. The real issue in this reference, I think, is the scope and ambit of sub-section (2) of section 40 of the Finance Act, 1983. Thus section 40 (sub-section (2)) of the Finance Act, 1983, provides: "40. (2) For the purposes of sub-section ....
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....urt was primarily engaged with the interpretation of the word "owner" and held that though under the common law "owner" means a person who has got valid title legally conveyed to him after complying with the requirements of law such as the Transfer of Property Act, the Registration Act, etc., in the context of section 22 of the Income-tax Act, 1961, having regard to the ground realities and further having regard to the object of the Income-tax Act, namely, to tax the income, "owner" is a person who is entitled to receive income from the property in his own right. The requirement of registration of the sale deed in the context of section 22 was held to be unwarranted. No doubt the above decision was given under the provisions of the Income-tax Act for the purposes of taxing the income in the hands of a person actually receiving the same. It is difficult to appreciate however as to how the said decision could be said to be relevant to the issue involved in the instant case which is assessment of a property owned by a person under the Wealth-tax Act. In my opinion, the said case has no application to the case in hand. Mr. Prasad in his written submission merely repeated the order ....
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....f the assessee. Having considered the case in full I find it extremely difficult to appreciate as to how the principles of the said case would at all be applied to the facts and circumstances of the case in hand. I have no hesitation to hold that the principles of the said Full Bench decision of the Patna High Court have no manner of application to the instant case either. Mr. Prasad, however, while making his submissions during the course of hearing sought to emphasise on a point that in interpreting a taxing provision if two views were possible then the view which favours the assessee should prevail was no longer a good proposition of law. Possibly Mr. Prasad was trying to draw some support from the observations made by the Patna High Court in the said Full Bench decision. In my opinion, the Full Bench decision of the Patna High Court is not an authority for the proposition for which Mr. Prasad relied on the said case. Interestingly enough the case relied upon by Mr. Prasad that is CIT v. Podar Cement Pvt. Ltd. [1997] 226 ITR 625 (SC) (referred to hereinabove in this judgment) reiterates the well known proposition of law regarding interpretations of the provisions of taxing sta....
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.... was the owner of the property in question. The conveyance of the property was not executed. The only question was whether the sum of Rs. 50 lakhs could be said to be a debt incurred in relation to or secured on the said property. The assessee had no right to appropriate the said sum as sale consideration till the sale was complete. The amount paid by the purchaser, according to Mr. Bajoria, was a liability which the assessee had to discharge in case the transaction of the sale in question did not materialise. At this stage the provisions under section 55(6)(b) of the Transfer of the Property Act, 1882, were referred to and relied upon on behalf of the assessee. For the sake of convenience the provisions of the said section are set out below '55. (6) The buyer is entitled... (b) unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any purchase money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept delivery, also for the ea....
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..... It was argued on behalf of the assessee that the value of the said property on the date of the valuation could not be arrived at ignoring the fact that Rs. 50 lakhs had been received towards such value in advance. The tax could only be levied therefore, on the net value of the asset. According to Mr. Bajoria, the fact that the cash of Rs. 50 lakhs received in advance or any investment made therefrom could not be assessed as they were not one of the specified assets under sub-section (3) of section 40 of the Finance Act, 1983, was not at all relevant. There is no doubt however that the wealth-tax was being levied only in respect of specified non-productive assets of closely held companies. The value of the said property on the relevant valuation date cannot be made ignoring the fact that Rs. 50 lakhs had been received towards such value in advance. On a plain reading of section 40(2) of the Finance Act, 1983, it is quite clear that the deduction is to be allowed in respect of any amount secured on or in relation to the property being the subject-matter of assessment. In my opinion a plain reading of section 40(2) of the Finance Act, 1983, or rather the grammatical construction....