TaxTMI 
TaxTMI 
1993 (1) TMI 128
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....erated this objection which was rejected by the CIT (Appeals) also. 2. In the further appeal before us it was contended on behalf of the assessee that under section 40 of the Finance Act, 1983, an office building held by the assessee for the purpose of its business was exempt and since the assessee was holding this property only for the purpose of its business by earning income therefrom, it should be exempted. It was pointed out that the articles of association specifically provided the holding of property and leasing of the same as part of the business and that income was shown as income from business in the profit and loss account even though bifurcated and assessed partly under the head 'Income from Property'. It was further pointed out that the assessee was also providing services and amenities for which the assessee was receiving fees and this activity was recognised by the Supreme Court as business in the case of Karnani Properties Ltd. v. CIT [1971] 82 ITR 547. It was submitted that in the circumstances, the entire property should be exempted from taxation. In the alternative it was submitted that there should be an exclusion of the land beneath the old building which ha....
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....ed to as the Wealth-tax Act), wealth-tax shall be charged under the Wealth- tax Act for every assessment year commencing on and from 1-4-1984, in respect of the net wealth on the corresponding valuation date of every company, not being a company in which the public are substantially interested, at the rate of two per cent of such net wealth. Explanation : For the purposes of this sub-section, 'company in which the public are substantially interested' shall have the meaning assigned to it in clause (18) of section 2 of the Income-tax Act. (2) For the purposes of sub-section (1), the net wealth of a company shall be the amount by which the aggregate value of all the assets referred to in sub-section (3), wherever located, belonging to the company on the valuation date is in excess of the aggregate value of all the debts owed by the company on the valuation date which are secured on, or which have been incurred in relation to the said assets : Provided that where any debt secured on any asset belonging to the assessee is incurred for, or enures to the benefit of any other person, of is not represented by any asset belonging to the assessee, the value of such debt shall not be....
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.... as to be in conformity with the provisions of this section. (6) Nothing in this section shall apply to any institution. association or body, whether incorporated or not and whether Indian or non-Indian, which the Central Government may, having regard to the nature and object of such institution, association or body, specify by notification in the Official Gazette and every notification issued under this sub-section laid, as soon as may be after it is issued, before each House of Parliament. (7) Subject to the provisions of sub-section (5), this section shall be construed as one with the Wealth-tax Act." 5. In this section in item (vi), the word 'cinema-house' was not there initially and it was introduced by an amendment made by Finance Act, 1988. The question arose whether prior to 1988, the cinema-house will be exempt from wealth-tax. The Tribunal held in the case of Varadaraja Theatres (P.) Ltd. v. WTO [1989] 29 ITD 29 (Mad.) that : " No doubt, the words " real estate " occur in the speech of the Finance Minister. Can it be stated that in the context in which those words have been used by the Hon'ble Finance Minister would refer to capital assets which are used for t....
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....t of Its business, it would be exempt. We must remember that we are dealing with a company which exists only for business. Reading the section as a whole, it appears to us that the intention is only to tax the building which is not held for the purpose of business. This is strengthened by the fact that even if assessed, the land is exempt for a period of two years from the date of acquisition if it is held for industrial purpose. 7. The second aspect of the argument of the Revenue is that the activity of the assessee with regard to this property did not constitute Its business. On this aspect, the material on record consists of (i) Articles of Association which indicates that the main object is : "2. To acquire by purchase, lease exchange or otherwise farms, lands, buildings and hereditaments of any tenure of description and any estate or interest therein, and any rights over or connected with lands so situated and to turn the same to account as many seem expedient and in particular by preparing building sites and by constructing, reconstructing, altering, improving, decorating, furnishing and maintaining offices, flats, houses, hotels, restaurants, shops, factories, warehous....