K.N. Chari Rubber and Plastics Pvt. Ltd. vs The Commissioner of Income Tax

P.P.S. Janarthana Raja, J.—Income Tax Appellate Tribunal, Madras, ''D'' Bench, referred the matter u/s 27(1) of the Income Tax Act at

the instance of the assessee, for opinion of this Court, raising the following questions of law:

Whether the Tribunal was right in holding that the values of the motor cars, land at Pallikaranai Village and factory building at Avadi are

includible in the net wealth of the appellant company despite the fact that all of them were acquired out of own funds of the appellant company and

such inclusion is against the intention of the legislature reflected in the speech of the Hon''ble Finance Minister while introducing the Finance Bill

1983?

Whether the Tribunal was right in holding that expression ''Motor Cars'' occuring in Section 40(3)(vii) of the Finance Act, 1983 leaves no

ambiguity in interpretation and as such, motor cars forming part of Plant & machinery in the block of assets for depreciation u/s 32 of the I.T. Act,

1961, as part of the Plant & Machinery, should be construed as motor cars simpliciter as specified for the purpose of Section 40(3)(vii) of the

Finance Act, 1983?

Whether the Tribunal was right in holding that the factory building at Avadi cannot be treated as business asset, used for the purpose of business

of the appellant company and the value thereof is includible in the net wealth of the appellant company as per interpretation of Section 40(3)(vi) of

the Finance Act, 1983 in the facts and circumstances of the case?

The brief facts of the case arising out of the above questions of law are as under:

The assessee is a closely held private limited company. In the wealth tax return relevant for the assessment year under consideration, the assessee

declared its net wealth excluding the value of motor cars, vacant land at Pallikaranai Village and the land and building at Avadi. The assessee

contended that the motor car being a plant and machinery on which depreciation was allowed in the Income Tax proceedings, the same is not

specified under the provisions of Section 40(3) of the Finance Act, 1983. Similarly, in respect of the land and building at Avadi, it was claimed that

it was a business asset and hence will not be liable to wealth tax. As regards the vacant land at Pallikaranai Village, the assessee contended that

certain loans have been raised against this property and therefore, the liabilities have to be given due consideration while arriving at the value of the

property. The Assessing Officer did not agree with the contentions of the assessee and disallowed the claims of the assessee. Aggrieved by the

order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The C.I.T.(A) dismissed the

appeal and confirmed the order of the Assessing Officer. Aggrieved by the order, the assessee filed an appeal before the Income Tax Appellate

Tribunal. The Income Tax Appellate Tribunal followed the assessee''s own case for the earlier assessment year and held that the wealth tax had

been rightly levied on these assets.

Though there was service of notice, there is no representation on behalf of the assessee.

We find that the issue stands covered by this Court judgment reported in K.N. Chari Rubber and Plastics Pvt. Ltd. Vs. The Commissioner of

Wealth Tax, , wherein it was held that the assessee is liable to wealth tax on the assets as stated above. Hence, we find no error or infirmity in the

order of the Income Tax Appellate Tribunal and we answer the questions of law in favour of the Revenue and against the assessee. No costs.