Commissioner of Wealth Tax, Meerut vs Shyam Lal

In both the aforementioned appeal filed u/s 27A of the Wealth Tax Act, 1957 (hereinafter referred to as the Act), the Commissioner of Wealth Tax, Meerut has raised the following two substantial questions of law:- Whether on the facts and in the circumstances of the case, the Tribunal was correct in a law to confirm the order of the Commissioner of Wealth Appeals with regard to the deletion by him of the inclusion of 1/2 shares from M/s Shyam Lal Jitendra Kumar and M/s Shyam Lal Surendra Kumar, Muzaffarnagar?

Whether, on the facts and in the circumstances of the case, Income Tax Appellate Tribunal was right in law for the purpose of section 7(1) of the Wealth Tax Act in determining the assessee''s interest in the partnership firm by adopting the fair market value of the assets in question namely, the Cinema building on the income mobilisation basis in respect of Land and Building method adopted by the Wealth Tax Officer?

Briefly stated the facts giving rise to the present appear are as follows.

The appeal relates to the assessment year 1986-87 and 197-88. The Wealth Tax Officer had added the value of half share of the respondent assessee''s interest in the firm M/s Shyam Lal Jitendra Kumar and M/s Shyam Lal Surendra Kumar at the hands of the assessee, which was deleted by the Commissioner of Wealth Tax (Appeals) on the ground that these two entities, namely, M/s Shyam Lal Jitendra Kumar and M/s Shyam Lal Surendra Kumar were HUFs and were not AOPs. The order of the Commissioner of Wealth Tax (Appeals) has been upheld by the Tribunal. The Wealth Tax Officer had taken the valuation as 100% share of the respondent assessee in the firm M/s G.D. Sons, Muzaffarnagar, which owned a cinema theater at Model Town, New Delhi known as Alpna Theatre.

In the appeal filed by the assessee, the Commissioner of Wealth Tax (Appeals) had held that the value of the cinema should be worked out on yield method inserted of land and building method as taken by the Assessing Officer. The order of the Commissioner of Wealth Tax Appeals has been upheld by Income Tax Appellate Tribunal.

We have heard Shri A.N. Mahajan, learned counsel for the revenue and Shri Krishna Agrawal, learned counsel for the respondent assessee.

So far as the first question is concerned, it is agreed between the learned counsel for the parties that the two entities have been held to be HUFs and even partial partition have been recognized by this Court in the case reported in 2001 UP Tax Cases 777, which is inter parties.

So far as the second question is concerned, it is also agreed between the learned counsel for the parties that this Court in CWT v. Shyam Lal [WT Reference No. 207 of 1997, dated 21-10-2005] has answered the question in the favour of the revenue and against the assessee. In view of the foregoing discussion, we partly the appeal. In so far as the first question is concerned, the order of the Tribunal does not call for any interference. However, in respect of question No. 2, the order of the Tribunal stands modified to the extent decided in Shyam Lal''s case (supra). In view of divided success, the parties are left to bear their own costs.

Both the appeals are partly allowed.