1992 (2) TMI 134 - AT - Wealth-tax

Tribunal: Leasehold interest not subject to wealth-tax under Finance Act

The Tribunal upheld the decision of the CWT(A) that the leasehold interest in immovable property should not be subject to wealth-tax under section 40 of ... Immovable Property, Leasehold Interest, Movable Property Issues involved: The judgment involves the interpretation of provisions of section 40 of the Finance Act, 1983 regarding the levy of wealth-tax on closely-held companies for the assessment years 1984-85 to 1986-87.Facts and Decision: The appeals and cross-objections were heard together and disposed of by a common order for convenience. The department appealed against the inclusion of the value of a leasehold property and jeeps in the wealth-tax assessment. The CWT(A) accepted the contention that the leasehold property should not be included but rejected the argument regarding the value of jeeps. The department contended that the leasehold property should be included based on section 2(e) of the Wealth-tax Act, while the assessee argued that section 40 of the Finance Act, 1983 is a self-contained code. The Tribunal upheld the CWT(A) decision, emphasizing that section 40 of the Finance Act, 1983 is a separate code for wealth-tax on closely-held companies and should prevail over conflicting provisions of the Wealth-tax Act.Interpretation of Section 40 of the Finance Act, 1983: The Finance Act, 1983 revived the levy of wealth-tax on closely-held companies to prevent tax avoidance. Section 40(1) is the charging section for closely-held companies, defining 'net wealth' in sub-section (2) and listing assets in sub-section (3). The Tribunal clarified that only assets specified in section 40 are chargeable to wealth-tax for closely-held companies. The provision excludes the operation of certain sections of the Wealth-tax Act, emphasizing its self-contained nature.Conclusion: The Tribunal dismissed the department's appeals, upholding the CWT(A) decision that the leasehold interest in the immovable property should not be assessed to wealth-tax under section 40 of the Finance Act, 1983. The judgment highlights the distinct and exclusive application of section 40 for wealth-tax on closely-held companies, emphasizing its self-contained nature and overriding effect on conflicting provisions of the Wealth-tax Act.