2006 (9) TMI 246 - AT - Wealth-tax

Commercial Properties in Pune Exempt from Wealth-Tax; Partial Appeals Allowed for Further Verification.

Satvinder Singh. Versus Deputy Commissioner Of Wealth-tax, Circle - 2, Pune.

Satvinder Singh. Versus Deputy Commissioner Of Wealth-tax, Circle - 2, Pune. - TTJ 112, 489, [2007] 109 ITD 241 (PUNE) Issues Involved:1. Whether the properties fall within the definition of 'assets' under section 2(ea) of the Wealth-tax Act, 1957.2. Whether the properties are exempt under section 2(ea)(i)(5) as commercial establishments or complexes.Issue-Wise Detailed Analysis:1. Definition of 'Assets' under Section 2(ea) of the Wealth-tax Act, 1957:The primary issue in these appeals is whether the properties in question fall within the definition of 'assets' as defined under section 2(ea) of the Wealth-tax Act, 1957, and are thus liable to wealth-tax. The properties in question include:- 1/2 share of office at 1002, 2nd Floor, New Budhwar Peth, Pune.- Office at 24, East Street, Yogesh House, Pune.- Office at Shankar Parvati Chamber, Plot No. 198/2, Dhole Patil Rd., Pune.- 1/2 share of office at ground floor, Shankar Parvati Chamber, Plot No. 198/2, Dhole Patil Rd., Pune.The grounds of appeal taken by the assessees argue that these properties do not fall within the definition of 'assets' under section 2(ea) of the Wealth-tax Act, 1957, and are thus not liable to wealth-tax.2. Exemption under Section 2(ea)(i)(5):The assessees claimed that these properties are exempt under section 2(ea)(i)(5) of the Wealth-tax Act, which excludes 'any property in the nature of commercial establishments or complexes' from the definition of 'assets.' The properties were let out to business entities, and the rent received was declared in the Income-tax Return.Detailed Analysis:A. Properties at 1002, 2nd Floor, New Budhwar Peth, Pune:- The property was purchased by the assessee and let out to the National Eggs Research Institute of Indian Council of Medical Research for office purposes.- The Assessing Officer and CIT(A) concluded that the property was not in the nature of a commercial establishment or complex but rather a commercial house property.- The Tribunal agreed, noting that the property was used for a dispensary-cum-laboratory and not for business or trade purposes.B. Office at 24, East Street, Yogesh House, Pune:- The property was purchased and let out to M/s. D.S.S. Mobile Communications Ltd. for their business activities.- The property is situated in a commercial area, and municipal taxes were paid as a commercial property.- The Tribunal concluded that the property is in the nature of a commercial establishment, used for business purposes, and thus falls within the exemption under section 2(ea)(i)(5).C. Office at Shankar Parvati Chamber, Dhole Patil Road, Pune:- The property was purchased and let out to M/s. Ericsson Communications (P.) Ltd. for office purposes.- The property is classified as commercial in municipal records and used for business activities.- The Tribunal concluded that the property is a commercial establishment and exempt under section 2(ea)(i)(5).D. 1/2 Share of Office at Ground Floor, Shankar Parvati Chamber, Dhole Patil Road, Pune:- The property was let out to M/s. Golden Touch Developments (P.) Ltd.- The Tribunal noted that further verification is needed to determine whether the property was used for business purposes.- The matter was remanded to the Assessing Officer for further enquiry and verification.Conclusion:The Tribunal concluded that the properties at 24, East Street, Yogesh House, and Shankar Parvati Chamber, Dhole Patil Road, Pune, are in the nature of commercial establishments and exempt from wealth-tax under section 2(ea)(i)(5). The property at 1002, 2nd Floor, New Budhwar Peth, Pune, does not qualify for the exemption. The case of the 1/2 share of office at ground floor, Shankar Parvati Chamber, was remanded for further verification. The appeals were partly allowed.