The Commissioner Of Income Tax vs Smt.Shaila S Hegde on 1 September, 2010

Karnataka High Court
The Commissioner Of Income Tax vs Smt.Shaila S Hegde on 1 September, 2010
Author: N.Kumar And H.S.Kempanna





THE I-ION'BLE MR. JU'5;I':--I¢E   

W.T.A. No.79 OF 2005 '-
W.T.A.N0. 93 OF'"2CO5,¥ w:',T.A;'NOA.92 OF 2005,
W.T.A. NO.91 OF 2005 W.T,A._.N_G,9Q___(__}F 2005,
w.'I'.A.NO,89 OF .2005, W.fI';A.NO.8"8/OF 2005.
W.T.A.I\¥().86_ OF 2005.; W.T;A:NO.85 OF 2005,
w.'I'.A.;NO,84 .OF"2_QQ5, W.T._A;NO;'83 OF 2005.
W.'IT~;A.N_O.82' IOF 20.05., .W,T.A.1\:O.81 OF 2005,
w.T.A.N.O,j30 OF «2005, W,T.A.NO.78 OF 2005,
,W--.~T,.A.NO.717,wOF'r2O05, W.T.A.NO.75 OF 2005,
 W.T.A;'Pé'O. 75 .01? 2005. .W,T.A.NO. 74 OF 2005,
 .'i'.A.NO;?'3.,OF'2'005 W.T.A.NO.95 OF 2005.
* " ' w.'1?,A.N'O.94, OF' 2005

 1. The C0n1missi'0ne;1f__O£'Income-tax.

QR. ?B1.11id1ng,
V *Q_ueevns % Rc)ad__,
" '«Bang53.0re,  

2,   Officer.

Ward? 1 112),
OR», Buildlng,

 .. Queens Road,

 " VV Bangaiore.

    Srl M.V. Seshachala, Advocate)

(Common 1n all WTAS.)



1. Smt. Shaiia .S. Hegde.
L/ R of Late B.T.Shankar Hegde,
Shree shaila.
Kanakapura Road,

2. Smt. Neena Shetty. 
L/ R. of Late B.T. Shankar Hegde,
Shree Shaila. 
Kanakapura Road,


3. Smt. Rashmi Gopi  
L/ R. of Late B.T. Shankar blegde; 
Shree Shaila, V    ; V .. " * "
Kanakapura Road,  ' ' *  '


4. Smt. Radhrk_a»'Thapa.,_  ._  

L/ of  BEE: .Shan'k_ar Hegde'.

Shxee Shtaila, '' é  --

Kar13«k21I3urai~?§i?=id,»e,  ._ '

Bangalore. ' '   "

 "  Respondents

[Common 1n ali W.’l’.A.s.)

‘~ _ Parthaéarafiii, Advocate)


.’ . are fiied under Section 27–A of the Wealth

Tax..__Act,;’19E37, agamst the Order dated 14~O9~2004 passed
1n W’§’A”.No.66/BANG/2003, W’I’A.No.81/BANG/2003, WTA.

No.82 /BANG/2003,WTA.No.70/BANG/2003,W’I’A.No.60/BA
., NG/.2003,WTA.No.86/BANG/2003.WTA.No.85/BANG/2003,

‘- _ V’_1’ALNo.84/BANG/2003,WTA.No.83/BANG/2003,WTA.No.6
2003. W’I’A.No.61/BANG/2003, W’I’A.No.69/BANG/2003,


2003, WTA. No.89 / BAN G / 2003, W’I’A.No. 7 9 / BA_N:G_}’–«’3GO3
and WTA.No.80/BANG/2003 respectively for the-~a8$es__s’1i1e1″1t
years 1983-84, 1979-80, 1980-81, 1987-88, 1.97-7-78–,vv ,_’1984-
85, 1983-84, 1982-83, 1981-82, 1985-86. ..198Q–8.1″.’ 1979.,
80, 1978-79, 1986-87, 1984-85, 3.9.86-87_,’ 1982:;-83′; ,198*1_- ‘
82, 1985-86, 1987-88, 19??-78 and °1’978_–79~ re’s§eetiVeIy*
praying to formulate the substantia} question “of ‘iaw.”stat7ed
therein and allow the appeaisand set aside the.”_Ofde’1′ passed’;
by the Income Tax Appellate ‘}’_1’ib_jezna.I.’=. V 1 _ ~

These WTAS. coming .._to1_§_ Heaifihg, _this day,

N.Ku.mar J ., delivered the foltowiixgfié V’ _ ‘A ”
,1 U 13,_§,:~*.~,,_’,§%«1 E8, _

The questioun initolved appeals is one
and the s;1nie.__a8h-dV–_Vthe_-Qfder’–‘of5,assessmer3,ts are passed
for dit’ferer1t taken up for consideration

together 811d ditsgetsed hy this common judgment.

9′,,A,.’t’:heVassessee is Sri. B.T. Shankar Hegde, who

hasatta’Vi_nec£.,;’eterna1 peace . He is now represented by

1eg’a1″heirs, Smt. Shaila S. I-Iegde, Smt. Neena

9 £§het:tyVv.”‘sInt. Rashmi Crop)’, and Srnt. Radhika Thapa. The

7.1s8essrI1ent in the case was concluded on 2731 March


1991 bringing to tax Wealth of Rs.2,14,13,286/–~. The
additions were made in the assessment on account of

the under mentioned additions made in the income tax

assessment of the assessee for the assessm.ent-««..»yeVar

(a) the value of the alleged gift’
at Rs.1,77,i2,773/–: ‘ ‘~ * A

b) the vaiue_4_ of’._ ‘consideration 7’
receivable from the Ancillary “C.onipanies”‘in ”

a sum of Rs.30,27,000

3. In View of th_e”V~ass«_éssrnent.orriers passed under

the aforesaid additions to
the iricorneéof’ the Assessing Officer under

thejsweaith h.e1d.”that the assets stood in the name of

. 7 * Shankarddfiegde and the assessee, at no point of

-the ownership of the assets and therefore,

the qnestion of ownership of assets stands firmly

.estah1ished in the name of Sri. B.T.Sha1ikar Hegde and

it only the legal heirs who are disputing the said

” “–“c1tiesti0n. There is no evidence attributed to their claim


that the assessee could have made a false ciaim
regarding the ownership of the assets. In the absence of
any such evidence being brought before the authorities,

the Assessing Officer held that the

Shankar Hegde was the owr1er__o.f the said” Heb’

aiso held, the assessee had
and drawings to the Ieijegderi L’
and Golay Limited and
drawings is ‘x’2s.30,2’x7;df.JO’/+_, that they

were the capitial-._asse’ts the-assestsvee and that the

provisions of were not attracted in
the light Vthej»udg:nen’r=”of the Supreme Court in the

casg; Vs’. B-.C’..”..Srinivasa Shetty is not tenabie.

Therefore”; he proceeded to assess the assessee under

Act. The net Wealth was treated as

and the tax thereon was held to be

.Rs.2zffi9:’,952/–. Giving deduction to the tax paid under

‘ K_VVSeetior1 15–B of the Act in a sum of Rs.14,149/–, it was

” the total tax payable was Rs.2,65,803/~.

Aggrieved by the said order of the Assessing Officer, the
assessee preferred an appeal to the Commissioner of
Income Tax (Appeals). The appeal was part1y..:all’ei§;ed,
directing deletion of addition towards
shares in M/ s Hegde it
Rs.3,26,600/– and upheld
actionable claim and V
additions as passed yliggrieved
by the said order of Income Tax

[Appeals], both’: ‘the has the Revenue

preferred’ thellllllribunal. The Tribunal
held, the “design’sTfaridltiravvings were acquired free of

cost.’ and ‘they rriade available to 18 Ancillary

commercial exploitation. The

Ant:il1ary*._:Coin:panies were liable to pay consideration

only these designs and drawings were actually

rxzsccl the production in this regard Commenced.

it is not in dispute that the said designs and

T’ ” “drawings were not utilized by the Ancillary Companies,


they earned no income and made no payment the

assessee and therefore, the same cannot be called”

an asset having any value. The designs and

were never put to use by the An’ci1l’aryg_
therefore, it is not possible
consideration to be receiVe’d:””.byhVh the by
transferring the so–called head.

The know–how is not lggitity, but is a
kind of obligati’olr;:vp:gi«vitl’js”_Aaglchangigfigghgiracter depending
on the usef additions made by
the theiassessment that it is a
wealth 4theV’Anci1lary Companies, is not
justified and ‘was diireeteél to be deleted.

as the Revenue appeals in relation to

ovcr–a_ll netfifealth assessed by the Assessing Officer is

:c:)ncern’e–d, the additions made in grespect of value

_ inifeeted in shares, in claims and income from

undisclosed sources being increase in wealth were


drawings and earn after manufacturing activity, they
should pay the consideration mentioned therein. The
A1’1<:~iHary Companies did not make use of these designs

and drawings and no manufacturing act1y*ity:'f"~W'aAS

conducted, no income was derived from thein '

any consideration to the assessee. those V

Cii'<"1iI'I1StaI1C€S, the said transfe:r_A'iA'of

drawings was worthless and._Vg:therefo1e_ the:TIi'[§tinaJ':was"' V

jimtgified in holding the rassessee. is nflot"}iab'E1e to pay

any wealth tax on the said Is.

_ fifiiding of the Tribunal that
the:-e vvdasgnov t’ransVfer’:”‘ofn’shares, is concerned, the said

C§LiVyI..*._§€$”.t!VI()iI71 is already concluded on the income tax side

. am for..ihfe’*~.Vsan1e reasons, it cannot be construed as

of the assessee and therefore, there

V –V ishz). to pay weaith tax.


The material on record discloses that M/ s. Hegde

and Golay Limited is liquidated and it just

exist and equaliy so, its 18 Ancillary Compar;ies.V is

For the aforesaid reasons, \;ve”‘d*o .not s_eefa.ri_y’11r.:’a’dingly. ‘ *

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