TaxTMI 
TaxTMI 
2018 (4) TMI 411
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....the assessee is involved in the business of trading and exporting services in the field of power. It is engaged in after sale service in respect of power projects, which includes operation and maintenance of power plant and providing training to customer's personal for operation and maintenance. During the course of assessment proceedings u/s 143(3) of the Income Tax Act, 1961, the ld AO observed that the assessee company's fixed assets comprised of 'freehold land' valued at Rs. 22,84,28,928/- and motor car valued at Rs. 7,94,700/- in the balance sheet as on 31.3.2009. The assessee had not filed its wealth tax return for the Asst Year 2009-10. Hence a notice dated 17.4.2014 was served on the assessee company to show cause as to why notice u/s 17 of the Act should not be issued for non-filing of the return of wealth since the total wealth chargeable exceeds the threshold limit required for filing wealth tax returns. In response to the said notice, the assessee vide letter dated 7.5.2014 submitted that the freehold land in question is not an 'asset' u/s 2(ea) of the Act. The assessee has purchased the freehold land from West Bengal Housing Infrastructure Development Corporation Ltd (....
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.... attention to the difference between 'industrial purposes' and 'manufacturing purposes' and also referred to various dictionaries, legal decisions and CBDT documents, since the term 'industrial purpose' was undefined in both the Wealth Tax Act, 1957 and the Income Tax Act, 1961. The assessee also submitted proof that the construction of office and service centre had commenced with effect from 18.12.2009. Evidences that the assessee had engaged to procure No Objection Certificate (NOC) / Clearance Certificates from various Government departments and a copy of the work order given by the company to M/s Nirman Constructions for construction of site office and boundary wall was also enclosed in the said letter. Further the assessee vide letter dated 9.12.2014, reiterated the submission submitted vide letter dated 19.11.2014 and referred to the definition of the term 'industry' defined under the Industrial Disputes Act, 1947 to establish that the land was held for 'industrial purposes' and that the ambit of 'industry' was wider than the term 'manufacture'. The assessee laid emphasis that the land in order to qualify for 'industrial purposes' , there is no need to carry on manufacturing ....
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....Construction of SBSTC Bus Terminus Complex Building, Ground Floor, City Centre. Durgapur-16 vide Letter No. NC/CFPL/24102009 dated 24.10.2009 that the work order was for "construction of site office and boundary wall" of the said land at Rajarhat, New Town. 5. The ld AO observed that the assessee company's fixed assets does not include any plant and machinery and hence there was no industrial activity carried out by the assessee company. Accordingly he held that the urban land was not meant to be used for industrial purposes so as to fall within the exclusion clause of definition of urban land. With these observations, he brought the value of freehold land in the sum of Rs. 22,84,28,928/- to wealth tax as a taxable asset in addition to value of motor cars in the sum of Rs. 7,974,700/- , which was upheld by the ld CWTA. Aggrieved, the assessee is in appeal before us on the following grounds:- 1. That on the facts and circumstances of the case, the Learned Commissioner of Wealth-tax (Appeals)-4, [ld. WCT(A)] has erred and was unjustified in considering the 'free hold' as an asset for the purpose of levy of wealth tax under the Wealth Tax Act, 1957 ('the Act') by ignoring ....
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....n. 6.3. Hence from the above definitions, it could be safely concluded that the expression 'industrial purposes' covers the activity of supply or distribution of goods and services and given that the assessee company's business is to provide services, the setting up of its office and service centre for the purpose of carrying out its business operations satisfies the criteria as being for 'industrial purposes'. Moreover, the subject mentioned land cannot be used for any other purpose other than for setting up of an office and service centre. 6.4. We find that the term 'industrial purposes' in section 2(ea) of the Wealth Tax Act, 1957 will cover retail, trading and service activities as these activities do also represent occupration or business which is conducted in an organized manner by deploying the requisite resources. 6.5. We find that the Co-ordinate Bench of Cochin Tribunal in the case of Federal Bank ltd vs JCWT reported in (2007) 107 ITD 451 had held that vacant land which was acquired by the assessee for commercial puproses and on which construction of building was started could not be treated as urban vacant land liable to wealth tax u/s 2(ea) of the Act. The Tri....
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.... 6.7. It would be relevant to understand the entire sequence of events right from the date of purchase of the freehold land by the assessee till the completion of construction of building to understand the intention of the assessee to use the subject mentioned land only for its business purposes :- 6.8. We find that the provisions of section 72A of the Income Tax Act, 1961 defines the expression 'industrial undertaking' wherein certain 'services' are also included. We find that the term 'service' is defined in section 28(va) of the Income Tax Act, 1961 in Explanation as under:- "service" means service of any description which is made available to potential users and includes the provision of services in connection with business of any industrial or commercial nature such as accounting, banking, communication, conveying of news orinformation , advertising, entertainment, amusement, education, financing, insurance, chit funds, real estate, construction, transport, storage, processing, supply of electrical or other energy, boarding and lodging. 6.9. We find that wherever the legislature intended to confine a particular benefit only for manufacturers, it had deliberate....