BENNETT, COLEMAN and CO.LTD vs. THE ASSTT.COMMISSIONER OF WEALTH TAX,SPL.CIRCLE - 18(2),MUMBAI and ANR

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IN IN IN THE

THE

THE HIGH COURT OF JUDICATURE AT BOMBAY

HIGH COURT OF JUDICATURE AT BOMBAY

HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL

JURISDICTION

WEALTH TAX APPEAL NO.453 OF 2001

Bennett Coleman & Co. Ltd.

Times of India Bldg., Mahapalika Marg, V.T.

Mumbai-400001.

..Appellant.

Vs.

Special Circle- 18(2), Aayakar Bhavan

D-36, M.K.Road, Churchgate, Mumbai-20.

having his office at Aayakar Bhavan, M.K. Marg,

Mumbai-400 020.

..Respondents.

Mr. R. Murlidhar with Mr. Pritesh Rajguru i/by PDS

Legal for the Appellant.

Mr.A.S.Rao with Mr. P.S.Sahadevan for the Respondents.

CORAM : F.I. REBELLO &

R.S. MOHITE, JJ.

DATED : 22nd January,2008

ORAL JUDGMENT :( Per F.I. REBELLO, J.)

following question.

"Whether a flat in a tenant co-operative housing

society which is transferred to the name of an

assessee on 17th April, 1993 and which comes to

the legal ownership of the assessee only on that

date, can be said to be "belonging" to the

assessee as on the valuation date of 31st March,

1993 so as to be liable to wealth tax for the

assessment year 1993-94? CNR No : HCBM020064182001 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:54:17

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few jurisdictional facts.

There is

dispute

that

the

society

had

granted

objection

the

previous

member

to sell the property before

1.4.1993.

There

is also no dispute that there was an agreement to

sell

between

the appellant and the previous owner

and

full consideration had been paid before 1.4.1993.

There

is also no dispute that the resolution was passed by the

society

admitting

the

appellant as

member

before

1.4.1993.

There is a further finding that the appellant

themselves included the said property as their assets in

their books for the Annual year 1992-93.

For considering the question of law what is relevant

is Section 4(7) of the Wealth Tax Act,1957. The section

as reproduced is as of 1.4.1997.

"Where the assessee is a member of a

co-operative society, company or other

association of persons and a building or part

thereof is allotted or leased to him under a

house building scheme of the society, company or

assocation, as the case may be, the assessee

shall, notwithstanding anything contained in

this Act or any other law for the time being in

force, be deemed to be the owner of such

building or part and the value of such building

or part shall be included in computing the net

wealth of the assessee; and, in determining the

value of such building or part, the value of any

outstanding instalments of the amount payable Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:54:17

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under such scheme by the assessee to the

society, company or association towards the cost

of such building or part and the land

appurtenant thereto shall, whether the amount so

payable is described as such or in any other

manner is such scheme, be deducted as a debt

owed by him in relation to such building or

part".

A reading of the said sub section would

indicate,

that

the requirements are that the

assessee

must

member and further that

building

part

thereof

allotted or leased to them.

these

two

conditions

are satisfied then notwithstanding

anything

contained in the Act or any other law for the time being

force, such assessee would be deemed to be the owner

such

building or part thereof and the valuation

such or part shall be included in computing the net

wealth of the assessee.

The learned counsel for the appellant seeks to rely

the rules framed under the Maharashtra

Co.operative

Societies Rules, 1961 and placed emphasis on Rule 24

which reads as under.

24.

Procedure for transfer of shares :-(1)

transfer of shares shall be effective unless :-

(a) it is made in accordance with the provisions

of the bye-laws; Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:54:17

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(b)

clear fifteen days notice in writing

given to the society indicating therein the name

the

proposed transferee, his

consent,

his

application

for membership, where necessary and

the value proposed to be paid by the transferee;

(c) all liabilities of the transferor due to the

society are discharged and

(d)

the transfer is registered in the books

the society.

(2) Any charge in favour of the society on the

share so transferred will continue unless

discharged otherwise."

We may also refer to the definition of a member under

Maharashtra Co-operative Societies Act which reads as

under.

"Member" means a person joining in an

application for the registration of a

co-operative society which is subsequently

registered, or a person duly admitted to

membership of a society after registration and

includes a nominal, associate or sympathizer

member".

Thus,

clear

that so far

the

assessee

concerned the assessee was admitted as member before

1.4.1993. Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:54:17

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The

argument canvassed by the assessee is that

transfer of shares shall be effected unless the transfer

registered

in the books of the society.

short,

the

learned counsel is seeking to place reliance on the

aforesaid

proviso

which

introduced

under

the

provisions

the

State

Act

namely

Maharashtra

Co-operative

Act,1960.

As we have already

noted

the

Wealth

Tax Act for considering the "assets" as that

the

assesses does not require transfer of shares.

All

that

requires

admission

membership

and

allotment

building

part

building.

Allotment

that extent does not require transfer

shares

of the society.

Section 4(7) of the Wealth

Tax

Act

which is a central legislation has not incorporated

reference

or otherwise the definition of the

State

Act,

the rules made thereunder for the

purpose

reading

the

provisions

of the Wealth Tax

Act.

That

would

not be possible considering that each State

will

have

its own laws.

What therefore, must be

considered

are

the provisions and the requirements as contained in

the

Wealth

Tax

Act.

The

Act

requires

only

two

requirements

firstly that the assessee must be a member

and

secondly the assessee shall be allotted a

building

part

the

building.

In the

instant

case,

noticed

us,

both the requirements

are

satisfied.

Allotment

being

by purchaser from the previous

member

and

the society giving its no objection to the sale and

the assessee being put in possession before the relevant

date by the previous member. Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:54:17

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behalf

of the appellant

the

learned

counsel

sought

to place reliance on the judgment of the Supreme

Court

in the case of Late Nawab Sir Mir Osman Ali

Khan

Vs.

Commissioner

Wealth Tax, Hyderabad

(162

ITR

888).

In that case what the Supreme Court was concerned

was

the expression "belonging to" an assessee.

the

facts

there

the Apex court noticed that there

was

transfer of ownership of the property in the name of the

vendee and the assessee continued to be the owner though

part performance of the contract the vendee had been

put

possession.

Admittedly

the

said

sale

deed

entered

into

had not been

registered.

Consequently,

there

was

transfer of ownership in favour

the

assessee. That judgment is distinguishable and

therefore, would not apply.

In our opinion, the question of law as framed by the

assessee in the present appeal would therefore, not

arise and consequently the appeal stands dismissed.

(R.S. MOHITE, J.)

(F.I. REBELLO, J.) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:54:17 Powered by TCPDF (www.tcpdf.org)