1982 (12) TMI 103 - AT - Wealth-tax

ITAT rules property used for partnership business qualifies for wealth-tax exemption

Inspecting Assistant Commissioner. Versus N. Soorian Pillai.

The Appellate Tribunal ITAT MADRAS-C ruled in favor of the assessee, allowing the claim for exemption from additional wealth-tax. The Tribunal held that ... Additional Wealth Tax, Business Premises, Let Out Issues:1. Claim of exemption from additional wealth-tax based on property ownership and business use.Detailed Analysis:The judgment by the Appellate Tribunal ITAT MADRAS-C involved appeals by the revenue concerning the claim of an assessee for exemption from additional wealth-tax. The assessee, an individual, owned a property with factory sheds, store rooms, etc., which was let out to a firm where the assessee was a partner. The income from the property was assessed as income from house property. The assessee claimed exemption from additional wealth-tax, arguing that the property was used for the partnership business and should be considered as business premises. The Commissioner (Appeals) allowed the claim, stating that the property satisfied the conditions of being owned by the assessee and used in his business.The main contention in the appeals was whether the conditions in the definition of 'business premises' under the Wealth-tax Act were conjunctive or disjunctive. The revenue argued that the property must be used in the assessee's own business as the owner to qualify for exemption. However, the Tribunal disagreed with this interpretation, stating that the ownership of the asset and its use in the business were separate conditions that were both satisfied in this case. The Tribunal emphasized that the intention of Parliament was to exempt assets used as business premises from additional wealth-tax, and there was no requirement for the use to be solely as the owner of the asset.The Tribunal rejected the revenue's argument that the assessee's income from letting out the property to the firm affected the exemption claim. It clarified that deriving income from letting out the property to one's own business did not disqualify the property from being considered as business premises. The Tribunal upheld the Commissioner (Appeals) order, concluding that the property met the conditions for exemption from additional wealth-tax.Regarding the cross-objections filed by the assessee, the Tribunal noted the disagreement over the valuation of properties but referred to a Supreme Court decision emphasizing that rectification of errors or omissions should be addressed by the relevant authority. The Tribunal dismissed the appeals and cross-objections, affirming the decision on the exemption claim and advising the parties to address any errors or omissions through the appropriate channels.