TaxTMI 
TaxTMI 
2003 (7) TMI 264
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....oresaid adjustment carried out by the Assessing Officer. 3. The ld. counsel appearing for the assessee submitted before us that the Assessing Officer has no jurisdiction under section 16(1) to make addition or to disallow any claim which is debatable and which is not in the nature of prima facie adjustment. It is argued that deduction of liabilities on pro rata basis has been approved by the ITAT, Mumbai in the case of Urmila & Co. (P.) Ltd. [WT Appeal Nos. 367 and 368 (Bom.) of 1990 dated 4-3-1996]. A copy of the order has been compiled at page 12 of the Compilation of cases. It is submitted that the assessee's claim was allowable and in any case no adjustment is permissible under section 16(1). The Ld. counsel relied upon the following decisions of the Hon'ble Bombay High Court: i. Khatau Junkar Ltd. v. K.S. Patani, Dy. GT[1992] 196 IR 55 (Bom.) ii. Tanna Exports v. M.G. Kamat, Asstt. CIT [1993] 202 ITR 219 (Bom.) iii. Adamas Gem Industries Ltd. v. Smt. Neela Krishnan, Asstt. CIT [1993] 203 ITR 737 (Bom.) The ld. counsel submitted that the above-mentioned cases have been rendered in the context of section 143(1) of the IT Act and that these cases are fully applicab....
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....ational Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383, it has been held by the Hon'ble Supreme Court that Tribunal can admit and decide such questions which are raised for the first time before the Tribunal. Accordingly, the additional grounds are admitted and are first dealt with. 8. With regard to additional ground No.1, the ld. counsel for the assessee submitted that the residential flat of the value of Rs. 7,60,52,519 is situated in Malabar Co-op. Housing Society Ltd. and such a flat does not fall within the category of an asset chargeable to wealth tax under section 2(ea) of the WT Act. The ld. counsel submitted that the legal owner of the flat is the Co-operative Housing Society and the assessee only holds five shares in the Society of Rs. 250 each. The ld. counsel submitted that such shares are in the nature of movable assets. The ld. counsel submitted that under section 2(ea) certain categories of assets only have been specified, value of which can be included in the net wealth of the assessee. It is submitted that ownership of shares in the co-operative housing society cannot be equated to a building and that such movable assets are outside the purview of section 2(e....
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....only shares in the cooperative housing society which are in the nature of movable property and cannot be categorized as a building or land appurtenant thereto. Similarly view has been adopted in the ITAT decisions which are all on the interpretation of the relevant provisions of section 40 of the Finance Act, 1983 which was omitted by the Finance Act, 1992 w.e.f. 1-4-1993. The aforesaid section 40 contemplates levy of wealth tax on closely held companies. As per sub-section 3 of section 40 of the Finance Act, 1983, wealth tax was levied on eight categories of assets. As per sub-section (5), it is stipulated that section 5 and clause (d) of section 45 of the WT Act and part 2 of Schedule 1 to the WT Act shall not apply for the purposes of levy of wealth tax in pursuance of the provisions of section 40 of the Finance Act, 1983. It is also stipulated that all other provisions of WT Act shall be construed so as to be in conformity with the provisions of section 40 of the Finance Act, 1983. As mentioned above in the cases cited, various Benches of ITAT were concerned about the interpretation of section 40 of the Finance Act, 1983. By virtue of sub-section (5), it was held that section 4....
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.... authorities on this point are confirmed. 10. The additional ground No. 2 is not pressed by the ld. counsel for the assessee and is therefore, rejected as such. 11. Reverting back to the original grounds of appeal, the ld. counsel for the assessee submitted that for the purposes of WT Act, the assessee owns motor vehicles and residential flats being Urvashi Flats and Borivali Flats and these assets have been acquired by the assessee-company by utilizing borrowed funds as under: (Rs.) (Rs.) i. Value of Motor vehicles 31,64,403 (Less) H.P. finance 27,97,292 ....
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....53 ITR II (FB). 12. The ld. DR contended that only such debts are deductible which have been incurred in relation to the assets which have been included in the assessee's net wealth. It is submitted that the loans which have specifically gone into acquisition of motor cars and flats have already been allowed and since there is no evidence or material to show that any other debts were used for acquiring these assets, the ld. CWT(A) was justified in rejecting the claim. 13. We have carefully considered the submissions made before us as have gone through the facts and the cases cited. As per provisions of section 2(m) of the WT Act, value of all debts owned by the assessee on the valuation date is deductible, which have been incurred in relation to the assets which have been included in the net wealth. The facts in the present case are not in dispute. For acquiring the relevant assets, the assessee raised certain loans which are directly referable to the assets. The claim of the assessee is that the remaining cost of the assets was also met by borrowed funds. However, verifiable record in this respect is not available. As per the balance sheet as on 31-3-1995, the value of total....