TaxTMI 
TaxTMI 
2015 (8) TMI 432
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....confronted by the AO during the course of assessment proceedings, it was submitted by the assessee that it does not have any taxable wealth as on 31- 03-2008. It was argued that the building is commercial as the building has been leased out and the vehicles owned by the company are against vehicle loan. However, the AO did not accept the above contention of the assessee. According to him, in the case of the assessee, property held by the assessee company for the year under consideration has been given on rent for a period less than 300 days and therefore it is an asset within the meaning of section 2(ea) of the Wealth Tax Act and accordingly liable to wealth tax. The AO therefore determined the net wealth of the assessee company at Rs. 6,62,97,931/-. 3. Before CIT(A) it was submitted that the said building is a commercial property which was constructed as I.T. park and it is known as "cybernex". It was argued that the property was approved as an infrastructure service provider by the Software Technology Park of India by the Ministry of Communication and Information Technology, Government of India. The Directorate of Maharastra has registered unit Cybernex as I.T. Park and the buil....
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....ercial complex/property as residential property and treating the same as asset within the meaning of section 2(ea) of the Wealth Tax Act, 1957 is incorrect and therefore the same may be set aside. 6. Based on the arguments advanced by the assessee and following the decision of the Tribunal in the 263 proceedings and various other decisions as mentioned in the appeal order the Ld.CWT(A) held that the AO is not justified in including the value of the said building "Cybernex" in the net wealth of the assessee for the year under consideration and directed the AO to exclude amount of Rs. 6,61,17,825/- from the net wealth of the assessee. 7. Aggrieved with such order of the CWT(A) the Revenue is in appeal before us with the following grounds : "1. Whether on the facts and circumstances of the case and in law, the CIT(A) erred in treating the building called Cybernex as not an asset with meaning of sub-clause (4) of clause (i) of section 2(ea) of Wealth Tax Act. ? 2. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in excluding the value of the said building 'Cybernex' in the net wealth of the assessee for the year under consideration? 3....
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....uch lease charges (rentals). Ostensibly, it is a settled proposition that where the intention is to exploit the immovable property by way of complex commercial activities, in that event the rental income must be held as a business income. The aforesaid proposition has been approved by the Hon'ble Supreme Court in the case of Shambhu Investments (P) Ltd. vs. CIT, 263 TTR 143 (SC) wherein the judgment of the Hon'ble Calcutta High Court in the same case reported in 249 ITR 47 has been approved. The material on record before the Assessing Officer, namely, lease arrangements with the lessees, the nature of activities undertaken by the assessee and the details of business receipts form the basis to examine whether or not the impugned intention of the assessee was to exploit the immovable property by way of complex commercial activities. All such material was before the Assessing Officer as he had duly called for such material. However, the difficulty is that there is no specific finding by the Assessing Officer in this context and therefore as per the Revenue, such an assessment order is liable to be treated as erroneous within the meaning of section 263 of the Act. In our consid....
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....s quite similar to the activities undertaken by the assessee in the present case. As per the appellant, the Tribunal vide its order dated 18.19.2012 (supra) considered such activities and came to conclude that the income from such activities was liable to be assessed as 'business income' and not as 'income from house property' as sought to be canvassed by the Revenue. . . . . . . . . . . 24. In view of the aforesaid precedent also we do not find any support for the stand of the Commissioner that the income from the impugned lease rentals was liable to be assessed as income from house property." 4.3.1 As could be seen from the above observations, the ITAT held that the business activities of the appellant had been specifically identified as leasing out floor space in the infrastructure facility, named as CYBERNEX and it does not find any support for the stand of the Commissioner that the income from the impugned lease rentals was liable to be assessed as income from house property. While taking such a view in the matter, the Tribunal also referred to its order in the case of DCIT vs. Magarpatta Township Development & Construction Co. vide ITA No.822/PN/2011 dated ....
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....3 (Mum), has decided the similar issue in favor of assessee. In the said decision, the premises was related to a business centre with multifarious facilities like central airconditioning services, attendants, sweepers, fax machine, furniture, receptionists, telephone operators, common waiting/ guest room with attached toilets, etc. and it was held that the receipts from such activities along with these facilities was to be assessed under the head income from business rather than the income from house property or income from other sources, as the object of the assessee was to run the business centre by exploiting the property and not merely letting out the property. The Hon'ble Gujarat High Court in the case of CIT vs. Saptarshi Services 265 ITR 379 (Guj), which also related to the leasing out a business centre with various services, has decided the issue in favor of the assesses and the SLP filed on behalf of the Revenue was dismissed by the Hon'ble Supreme Court as reported in 264 (ST) 36. In this background, it is clear that assessee has provided various complex integrated services as mentioned in Schedule-II to the lease agreement with the I.T. Company. The services are....
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....ral facilities in the building to various IT enabled companies etc. and therefore in my considered opinion sub-clause (4) of clause (i) of sec. 2(ea) of Wealth Tax Act, is not applicable to the facts of the present case. The property in question in the nature of commercial establishment or commercial complex as envisaged in sub-clause (5) of clause (i) of sec. 2(ea) of Wealth Tax Act and therefore the same falls within the exclusions provided in clause (i) of sec. 2(ea). On the facts of the case, the Assessing Officer is not justified in including the value of the said building 'Cybernex' in the net wealth of the appellant for the year under consideration and accordingly the Assessing Officer is directed to exclude the amount of Rs. 6,61,17,825/- from the net wealth of the appellant. Ground of appeal No. 1 succeeds." 11. Since the Ld.CWT(A) while treating the asset as a commercial property has followed the decision of the Tribunal in assessee's own case in the 263 proceedings and has also relied on various other decisions and since the Ld. Departmental Representative was unable to distinguish the findings given by the CWT(A) by placing any cogent material, therefore, we do....