Wealth tax on industrial property purchase under SAFARAESI Act

[CLARENCE PEREIRA]

We have purchased a property(industrial) with land & building from the Bank under SAFARAESI Act.No production/business has commenced from there,eventhough we are operating from other premises.Does this property come under wealth tax as vacant urban land?.our understanding is that as there is building existing in the property it does not get covered under vacant urban land & hence not an asset for wealth tax.please clarify

[CAGOPALJI AGRAWAL]

Of course, this is not an urban land hence out of the purview of taxable asset under welath tax

[CLARENCE PEREIRA]

The ITO says since this is unused it comes under 'vacant land' and hence taxable under WT.Any case laws?

[DEV KUMAR KOTHARI]

Please re-check with reference to S. 2(ea)(i). If the property is used / or can be used for business purposes, say as warehouse, store room, standby arrangement or in any other manner, then it will be exempt. if the property is in the nature of commerical establishment, or complexes then also it will be exempt. See exemption in above clause particularly (3)- any house which the assessee may occupy for the purpose of any business or profession carried on by him"- see the word use is may use. and clause (5) any property in the nature of commercial establishment or complexes. Please inform significance of SAFARESI Act,and purchase from bank. If it in relation to any commercial or industrial complex, then there will be exemption.On search in Google I found this query from you on TMI but no result for SAFARAESI Act.

[CLARENCE PEREIRA]

If you are enquiring about SAFARAESI Act,then this is disposal of assets by a Bank to recover dues from its Borrowers.Under this Act the purchaser gets the assets of the Company but not the liabilities.The property in question is Industrial land with built up factory building in a industrial zone.

[DEV KUMAR KOTHARI]

The property being land and building situate in industrial complex in nature of commercial establishment, is not taxable property.

[CLARENCE PEREIRA]

Even if it is unused ?

[Surender Gupta]

If an officer at in the broad day light at noon/midday says that it is midnight and burn the lamp, what any body can say? "Andher Nagari Chaupat Raja"

AI Summary

Debate: Is Industrial Property Bought Under SAFARAESI Act Subject to Wealth Tax as Vacant Urban Land? A discussion on a forum revolves around whether an industrial property purchased under the SAFARAESI Act is subject to wealth tax as vacant urban land. The property includes land and a building, but no business operations have started there. One participant argues it is not taxable as it is not urban land, while another mentions that the Income Tax Officer considers it taxable due to its unused status. It is suggested that if the property is intended for business use, it may be exempt. The SAFARAESI Act involves banks disposing of assets to recover dues without transferring liabilities.