TaxTMI 
TaxTMI 
2002 (11) TMI 45
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....in holding that the property let out by the assessee was not an asset exigible to wealth-tax within the meaning of section 40(3)(vi) of the Finance Act, 1983?" The short facts are that the assessee is a closely held company in which the public are not substantially interested and its assets are subjected to wealth tax. The question that arises is whether the value of the portion of the building which was let out by the assessee in favour of the Punjab National Bank would be an exempted asset from the list of assets found in section 40(3) of the Finance Act, 1983? The Assistant Commissioner of Wealth-tax rejected the claim of the assessee by holding it was liable to wealth-tax. The Commissioner of Wealth-tax (Appeals) also rejected the cl....
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....al Plast Ltd. v. CIT [1999] 237 ITR 454 after referring to the earlier decisions of the Supreme Court in CEPT v. Shri Lakshmi Silk Mills Ltd. [1951] 20 ITR 451; Narain Swadeshi Weaving Mills v. CEPT [1954] 26 ITR 765; CIT v. Calcutta National Bank Ltd. [1959] 37 ITR 171; Sultan Brothers Private Ltd. v. CIT [1964] 51 ITR 353; New Savan Sugar and Gur Refining Co. Ltd. v. CIT [1969] 74 ITR 7 and CIT v. Vikram Cotton Mills Ltd. [1988] 169 ITR 597, has laid down the following tests when the assets let out could be regarded as letting out in the course of business, and when it will be regarded as letting out as an owner of the property: "1. No precise test can be laid down to ascertain whether income (referred to by whatever nomenclature, leas....
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....n of the assessee whether he intends to go out of business altogether or to come back and restart the business. It was held that only where the asset was let out temporarily, it would amount to exploiting the business assets, but where there was no intention to resume the business, the transaction would only be exploitation of the property as the owner thereof. We find that the Appellate Tribunal has not gone into the nature of the lease or the terms of the lease to find out the period of lease and the terms under which the property was let out to find out the intention of the assessee, viz., whether the assessee was exploiting the same as a business asset or exploiting the same as a owner thereof. The Commissioner of Income-tax (Appeals) h....
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....s. The Calcutta High Court in CWT v. Sun Jute Press (P.) Ltd. [1993] 203 ITR 350 has also taken a similar view and the Calcutta High Court and laid down the law as under: "As a matter of fact, even where a lull falls upon a business, the business cannot be said to be non-existent. The letting out or leasing out of the commercial asset during such period of lull is accepted judicially as another mode of commercial exploitation of the assets. This view has been taken in CEPT v. Shri Lakshmi Silk Mills Ltd. [1951] 20 ITR 451 (SC). We are not furnished with the complete facts creating the situation for the part of the leasehold property becoming surplus. We are not told what the tenure of the lease is; if it is a lease for a short period, we....
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.... the merits, we are of the clear opinion that an order passed in the wealth-tax proceedings would have no effect on the income-tax proceedings. The concepts of wealth-tax and income-tax would have to be definitely read separately. Even assuming that this property was a commercial property, we would be bound by the Supreme Court judgment, where the Supreme Court held that even a commercial property which is exploited otherwise than in the course of business by letting out, the income from such letting out could not be said to be a business income." Therefore, the fact that the income from the property was assessed as business income under the Income-tax Act is not conclusive. But no doubt it may be a relevant factor in deciding the questi....