TaxTMI 
TaxTMI 
2003 (11) TMI 67
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....n holding that 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?" Tax Case No. 230 of 1998 is a reference at the instance of the assessee and the question of law referred by the Income-tax Appellate Tribunal at the instance of the assessee for the assessment year 1986-87 reads as under: "Whether the Tribunal was right in law in holding that the building Asoka Plaza is not to be treated as 'plant' of the applicant's business of real estate developing and managing office and commercial complexes duly authorised by the applicant's memorandum of association of the company but is to be treated as 'building' chargeable to wealth-tax in the hands of the app....
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....e shops and one office, which have been let out to tenants on the valuation date and the Tribunal held that the building was liable to be taxed as it was not used for any of the purposes mentioned in section 40(3)(vi) of the Finance Act, 1983 and dismissed the appeal. As far as Tax Case No. 83 of 1998 which is at the instance of the Revenue is concerned, the Appellate Tribunal held that the shopping complex was a commercial asset and the assessee was exploiting the commercial asset by letting it out and the Appellate Tribunal following its earlier order in the case of Fagun Co. (P.) Ltd. v. Deputy CWT [1993] 45 ITD 117 held that since the business of the assesssee was to let out the property, the property used should be considered to be us....
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....is that since it is a commercial asset, it is not liable to be taxed under the provisions of the Wealth-tax Act. Learned counsel submitted that the commercial complex owned by the asses see is used by the assessee for the business and is not liable to be taxed under section 40 of the Finance Act. We carefully considered the submissions of learned counsel for the Revenue and learned counsel for the assessee. The levy of wealth-tax on companies was introduced in the year 1957. Section 13 of the Finance Act, 1960, provided that wealth-tax is not leviable on a company with effect from April 1, 1960. By the Finance Act, 1983, the exemption granted to the companies from the levy of the wealth-tax was partially withdrawn in respect of certain cat....
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.... liability to a substantial extent. With a view to circumventing tax avoidance by such persons, I propose to revive the levy of wealth-tax in a limited way in the case of closely-held companies. Accordingly, I am proposing the levy of wealth-tax in the case of closely-held companies at the rate of 2 per cent. on the net wealth represented by the value of specified assets, such as, jewellery, gold, bullion, buildings and lands owned by such companies. Buildings used by the company as factory, godown, warehouse, hotel or office for the purposes of its business or as residential accommodation for its low paid employees will be excluded from net wealth." A reading of the speech of the Finance Minister shows that section 40 of the Finance Act w....
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....le to accept the submission of learned counsel for the assessee that section 40(3) of the Finance Act is not intended to cover the commercial asset owned by the assessee. This court in the unreported decision in CWT v. Reliance Motor Co. Ltd. (Tax Case No. 60 of 1997, dated September 5, 2002--since reported in [2003] 260 ITR 571) has taken the view that motor cars, owned as stock in trade of the dealer are liable to be taxed as the words used in section 40(3) of the Finance Act 1983, do not preclude the exclusion of stock in trade from the list of assets to be valued for the purpose of wealth-tax. This court also in CWT v. Varadharaja Theatres Pvt. Ltd. [2001] 250 ITR 523 has taken the view that unless a business asset is excluded from the ....
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....n also has no application as we are concerned with the question whether the commercial complex would fall within clause (vi) of sub-section (3) of section 40 of the Finance Act, 1983. The next question that arises is whether the assessee is entitled to the exemption in view of the exclusionary clause found in section 40(3)(vi) of the Finance Act, 1983. Section 40(3)(vi) while including the building and the land appurtenant thereto for levy of wealth-tax, excludes certain items of assets listed in the sub-section. In other words, certain specific items of assets are excluded from the scope of levy of wealth-tax and the assets so excluded are factory, godown, warehouse, hotel or office used for the purposes of its business. The commercial co....