Commissioner of Income-tax Vs. Smt. Badhurani Deepinder Kaur and ors. - Court Judgment

G.S. Singhvi, J.

1. This is an appeal under Section 27A of the Wealth-tax Act, 1957 (for short, 'the Act'), for determination of the following questions of law :

'(i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that flat in 'Reviera Apartment' Delhi, Okhla Industrial Area, Delhi, and hotel site in Chandigarh did not belong to the assessee within the meaning of Section 2(m) of the Wealth-tax Act and hence could not be assessed, as such in his hands merely on the ground that these have not been transferred in his name particularly when the assessee had made full consideration of the value of the property but did not get it transferred intentionally/otherwise and had also subsequently declared it as an asset in his wealth-tax return for the assessment year 1995-96 under similar circumstances ?

(ii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the flat in Reviera Apartment Delhi, Okhla Industrial Area, Delhi, and hotel site in Chandigarh did not belong to the assessee within the meaning of Section 2(m) of the Wealth-tax Act, and hence could not be assessed, as such in his hands merely on the ground that these have not been transferred in his name particularly when the assessee had made full or partial consideration of the value of the properties and the value of such consideration so made, in the alternate, is liable to be included in his net wealth ?'

2. We have heard Dr. N. L. Sharda and perused the orders of the assessment passed by the Wealth-tax Officer, Faridkot, in relation to the assessment years 1969-70 to 1980-81, the appellate order passed by the Commissioner of Income-tax (Appeals) and the orders passed by the Income-tax Appellate Tribunal, Amritsar (for short 'the Tribunal'). While dealing with the question whether the flat in Reviera Apartments, Okhla Industrial Estate, New Delhi, belonging to the assessee could be treated as part of his wealth for the purposes of the Act, the Tribunal referred to the factum of payment of Rs. 1 lakh by the assessee on November 25, 1968, letters dated November 5, 1968, November 25, 1968, and November 26, 1971, sent by Reviera Apartments Pvt. Limited, New Delhi, and observed as under :

'Whereas, on the other hand, according to the assessee, he admitted as having deposited a sum of Rs. 1,00,000 vide receipt dated November 25, 1968, with Reviera Apartments Pvt. Limited, New Delhi, for the purposes of flat on November 25, 1968. He further admitted in its letter dated November 25, 1968, acknowledging the receipt of cheque and also confirmed having delivered the possession of the same to the assessee. However, according to the assessee, since no formal agreement has been executed between the assessee and Reviera Apartments, so, according to him as per Section 2(m) of the Wealth-tax Act, the property did not belong to the assessee on the valuation dates as no sale deed has been executed as enjoined in section 54 of the Transfer of Property Act and, therefore, it is not assessable in the hands of Reivera Apartments Pvt. Ltd., New Delhi. The assessee has strongly relied on Nawab Sir Mir Osman Ali Khan (Late) v. CWT : [1986]162ITR888(SC) . In the above noted case, the assessee, the Nizam of Hyderabad, had received full consideration for certain movable property from the purchaser and had delivered possession to the vendee, but has not yet executed registered sale deed in their favour. The Revenue assessed the property in the hands of the Nizam of Hyderabad and the matter was settled by the Supreme Court in the above judgment laying down as under (headnote) : 'The liability to wealth-tax arises because of the belonging of the asset and not otherwise. Mere possession, or joint possession, unaccompanied by the right to be in possession or ownership of property, would, therefore, not bring the property within the definition of 'net wealth' for it would not then be an asset 'belonging' to the assessee.''

3. At page 894, the Supreme Court observed as under :

'In the instant appeal, however, we are concerned with the expression 'belonging to' and not with the expression 'owner' ... the liability to wealth-tax arises because of the belonging of the asset and not otherwise. Mere possession or joint possession unaccompanied by the right to be in possession or ownership of property would, therefore, not bring the property within the definition of 'net wealth' for it would not then be an asset 'belonging' to the assessee. ... It has also to be borne in mind that unlike the provisions of the Income-tax Act, Section 2(m) of the Wealth-tax Act uses the expression 'belonging to' and as such indicates something over which a person has dominion and lawful dominion.'

4. At page 896, Supreme Court held as under :

'Therefore, the fact that the Legislature has deliberately and significantly not used the expression 'assets owned by the assessee' but 'assets belonging to the assessee', in our opinion, is an aspect which has to be borne in mind.'

5. In CIT v. Podar Cement Pvt. Ltd. : [1997]226ITR625(SC) the Supreme Court interpreted the word 'owner' of the house as defined under Section 22 of the Income-tax Act, 1961, and Section 9 of the old Act, 1922, whereas in the instant case, we are concerned with the expression 'belonging' to the assessee under Section 2(m) of the Wealth-tax Act and not with the expression 'owner' used under Sections 22 to 24 of the Income-tax Act, 1961. In other words, liability to pay wealth-tax arises because of the 'belonging' of the assessee and not otherwise. The material question in the light of the above cases cited by the parties required to be decided by us is did Reviera Apartments flat, in respect of which no registered sale deed has been executed in favour of the assessee but consideration for sale for which had been received from the assessee by the Reviera Apartments and the possession of the same had also been handed over to the assessee is 'belonging' to the assessee for the purpose of inclusion in the net wealth. The Supreme Court in Nawab Sir Mir Osman Ali Khan (Late) v. CWT : [1986]162ITR888(SC) cited by the assessee and discussed in detail by us has clearly answered this question for the purposes of assessment with regard to wealth-tax cases on the basis of which it would be inferred that this Reviera Apartments flat did not belong to the assessee within the meaning of Section 2(m) of the Wealth-tax Act. Hence, we conclude that the Reviera Apartments flat in question did not belong to the assessee within the meaning of Section 2(m) of the Wealth-tax Act. Now, since, we have held that this Reviera Apartments flat did not belong to the assessee, the liability of the assessee also did not arise to pay any wealth-tax in respect of this flat and accordingly, the lower authorities are not justified in levying any wealth-tax in respect of this flat in Reviera Apartments in the hands of the assessee for the relevant assessment year.

6. In respect of Okhla plot, the Tribunal observed as under :

'In this ground, the contention of the assessee is that he is not the owner of the Okhla plot, Delhi, since no conveyance has been executed in favour of the assessee and the plot had not been handed over to him by the DDA till August, 1984. So this plot in Okhla Industrial Area did not belong to the assessee within the meaning of Section 2(m) of the Wealth-tax Act and so this plot cannot be taxed in the hands of the assessee under Section 2(m) of the Wealth-tax Act. However, the Commissioner of Wealth-tax (Appeals), on the basis of the order passed in respect of the flat of the assessee in Reviera Apartments came to the conclusion that this plot also belonged to the assessee within the meaning of Section 2(m) of the Wealth-tax Act and here the Commissioner of Wealth-tax (Appeals) assessed its valuation on the different valuation dates for the purposes of wealth-tax and detailed the same at pages 48 and 49 of his order from the assessment year 1969-70 to 1980-81 (assessment year 1969-70 in question).'

7. While dealing with the question whether the hotel site at Chandigarh formed part of the wealth of the assessee, the Tribunal observed as under :

'While disposing of the ground with respect to the valuation of flat in Reviera Apartments, New Delhi, in W. T. A. No. 48(ASR) of 1986, we have, after proper discussion and on detailed reasoning, held that the Reviera Apartments flat, New Delhi, does not belong to the assessee within the meaning of Section 2(m) of Wealth-tax Act and hence the liability of the assessee to pay wealth-tax on this flat also does not arise. On the basis of this finding, we have allowed the ground of appeal pertaining to the Reviera Apartments flat, New Delhi, in favour of the assessee holding that no tax can be levied in respect of this flat in the hands of the assessee under Section 2(m) of the Wealth-tax Act. On the same reasoning we also hold with respect to hotel site at Chandigarh that this property was also not exigible to wealth-tax in the hands of the assessee. These grounds are also decided in favour of the assessee and the orders of the lower authorities in levying tax in respect of this hotel site at Chandigarh in the hands of the assessee are also set aside.'

8. In our opinion, the findings recorded by the Tribunal that the flat in Reviera Apartments, the plot in Okhla Estate and the hotel site at Chandigarh did not belong to the assessee are based on a correct appreciation of evidence and none of the questions framed by the appellant can be treated as a substantial question of law requiring determination by this court.

9. Hence, the appeal is dismissed.