2015 (12) TMI 1361

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....or construction of hotel by the assessee would come under the definition of taxable assets u/s 2(ea) of the Act. The assessee has also raised the additional grounds of appeal as below:- "For that the ld.CIT(A) should have granted exemption u/s. 5(vi) of the W.T Act since the property being vacant land was held by the assessee which comprised of an area of less than 500 sq.mtrs. 2. For that even otherwise the land was held for Industrial purposes and putting up a hotel and as such was exempt under the provisions of the Wealth Tax Act". As these additional grounds go to the root of the matter and it only involves question of law and the facts regarding the same are very much available in the file of the lower authorities, the same are admitted herein for adjudication in the light of the decision rendered by the Hon'ble Supreme Court in the case of National Thermal Power Corporation Ltd reported in 229 ITR 383 (SC). 4. The brief facts of these appeals are that the assessee is a company in which the public are substantially interested and is engaged in the business of running a hotel selling sweetmeat, snacks, fast food etc. The assessee had purchased a land at Canal Circular R....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rejected. The Learned CWTA held that the decisions relied upon hereinabove by the assessee are distinguishable from the facts of the instant case as in the cases relied upon hereinabove, the construction of buildings was substantially completed as on the valuation dates and whereas in the case of the assessee, the approval for construction of guest house itself was received from Kolkata Municipal Corporation on 29.6.2005. Hence he held that the value of urban land had to be brought to tax for all the three asst years and upheld the additions made by the Learned AO. Aggrieved, the assessee is in appeal before us for the three assessment years. 5. The Learned AR made a preliminary submission that exemption u/s 5(vi) of the Act is applicable in respect of plot of land less than 500 sq. metres and he further argued that this exemption is not confined only to individual and HUF but is also applicable for all the assesses. He argued that though in the main provision, only individual and HUF was mentioned , but in the proviso, the word used is 'assessee' and hence the intention of the legislature is to extend the benefit of exemption in respect of plot of land measuring less than 500 sq.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... - one house or part of a house or plot of land belonging to an individual or Hindu Undivided Family: Provided that wealth tax shall not be payable by an assessee in respect of an asset being a plot of land comprising an area of five hundred square metres or less. The relevant Explanatory memorandum is reproduced herein below:- Scope of section 5(vi) - Exemption for house / plot Section 5(vi) was inserted by the Finance Act, 1993 , with effect from 1-4-1994 when the asset wise levy of wealth tax was introduced. After the introduction of this new scheme of taxing only non-productive assets, one house property was exempt under clause 5(1)(iv) which now is 5(vi). Exemption is extended to those who do not have a house property for whom a plot of land not exceeding 500 sq.mtrs will be exempt, so as to bring on par persons, who have a plot but do not have a house. Benefit is available to individual and Hindu Undivided Families. The alternative of plot was included by the Finance (No. 2) Act, 1998, with effect from 1-4-1999. Para 68.4 Under the existing clause (vi) of section 5, one house or part of a house belonging to an individual or a Hindu Undivided Family is exempt from....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ss, provided for a monetary consideration. (7) "hotel-receipts tax" or "tax" means the tax chargeable under the provisions of this Act. We find from the finding given in Learned CITA order that the land was purchased by the assessee on 12.3.2003 and the said land is meant for construction of hotel. It is well settled that Hotel is an industry and hence the assessee is eligible to claim exemption for two years from the date of acquisition in respect of urban land held for industrial purposes. Accordingly, we hold that the assessee is eligible for exemption for urban land from wealth tax for Asst Years 2003-04 & 2004-05. It is well settled that the assets held as on the valuation date (i.e 31st march of each year) is the relevant date for bringing an asset under the ambit of wealth tax. Similarly the exemption provision also needs to be looked into as per the prevailing law on the valuation date. Since the land was purchased on 12.3.2003 , it will continue to claim exemption upto 12.3.2005 but not thereafter and accordingly comes under the ambit of taxable wealth as on 31.3.2005 being the valuation date. Hence the assessee is not eligible for exemption from wealth tax under this....