2005 (9) TMI 29 - HC - Wealth-tax

Court Rules Revenue Prevails in Wealth-tax Act Exemption Case

The court set aside the Tribunal's order, ruling in favor of the Revenue. The judgment emphasized the requirement for buildings to be used for business ... '(1) Whether Tribunal is right in law in holding that the assessee's case is hit by section 40 of the Finance Act, 1983? (2) Whether Tribunal is right in law and fact in relying on the finding of the High Court in the income-tax case of the assessee that this is the business income and is not the approach and reliance on the finding in the wealth-tax case wrong, unwarranted and vitiated?' - The first order is dated December 23,1994. Petition to recall was filed on May 6, 1997, i.e., within two years and six months. The second order is dated October 18, 2000. We agree with learned counsel for the Revenue that the time taken by the Tribunal to pass orders cannot be taken into consideration. The application was filed within four years. Hence, the order is not hit by section 35(7) of the Act. In the above view of the matter, the order passed by the Tribunal is set aside. Appeals are allowed Issues:1. Interpretation of section 40(3)(vi) of the Finance Act, 1983 under the Wealth-tax Act, 1957.2. Application of business premises exemption under section 40(3)(vi) to a weaving shed rented out and a building used as a kalyana mandapam.3. Legality of the Tribunal's order and the timeline of the second order under section 35(7) of the Act.Analysis:1. The judgment dealt with the interpretation of section 40(3)(vi) of the Finance Act, 1983 under the Wealth-tax Act, 1957. The court analyzed the specific inclusions and exclusions mentioned in the provision, emphasizing the requirement for a building to be used for business purposes to qualify for exemption.2. Regarding the application of the business premises exemption under section 40(3)(vi), the case involved a weaving shed rented out to the Civil Supplies Corporation and a building converted into a kalyana mandapam. The Commissioner of Wealth-tax had revised the assessments, contending that unless the building was used as a warehouse or a godown, exemption could not be granted. However, the Tribunal considered the income from the rented premises as business income, aligning with the treatment in income-tax proceedings.3. The legality of the Tribunal's order and the timeline of the second order under section 35(7) of the Act were also scrutinized. The court addressed the argument raised by the respondent regarding the limitation period for passing the second order, highlighting that the application for the recall was within the stipulated timeframe, thus not violating the provisions of section 35(7) of the Act.In conclusion, the court set aside the Tribunal's order, allowing the appeals in favor of the Revenue. The judgment underscored the necessity for buildings to be used for business purposes to qualify for exemptions under the relevant provisions, emphasizing a strict interpretation of the law in determining taxable wealth.