2012 (4) TMI 295

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....gh section 40(3)(vib) of the Finance Act, 1983, states if the pro- perty used by the director, manager and secretary as residential accommodation then it will not be exempt and the same will be included as taxable asset in the net wealth of the assessee ?   2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the value of the property at door Nos. 123 and 124 should not be included in the assessee's net wealth is valid ?"   2. The assessee, apart from doing printing business, is also doing the busi- ness of leasing out the properties. It has leased out two properties at Door Nos. 123 and 124, Brick Kiln Road, Madras-7. The first property was leased ....

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....properties, a portion of the factory premises was leased out to M/s. Lotus Inks, which also carries on the manufacture of inks and, therefore, in terms of the section 40(3)(vib) of the Finance Act, they are entitled to exemption. These objections did not find favour with the Assessing Officer, who ultimately finalised the assessment, determining tax after rejecting the claim for exemption.   3. When the matter was taken on appeal to the Commissioner of Income- tax, in so far as the challenge to the residential house occupied by the managing director is concerned, the case of the assessee has been accepted. In so far as the premises at Door No. 123 is concerned, the Com- missioner of Income-tax (Appeals) found that inasmuch as the na....

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.... managing director has got more than one per cent. share, the assessee would be entitled to exemption in terms of the above provision. This find- ing has been accepted by the Income-tax Appellate Tribunal. However, in our opinion, the reasoning of the Commissioner of Income-tax (Appeals) as well as the Tribunal in favour of the assessee is not on proper con- struction of the above provision. Nevertheless, the assessee would be entitled to exemption for our own reasons, which we are inclined to deal with. A careful reading of the above provision would show that the ques- tion of holding more than one per cent. of equity share for claiming the benefit would arise only in case of an employee of the assessee and not the director, manager or the....