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Issues involved:
The interpretation of section 2(ea) of the Wealth Tax Act, 1957 regarding the inclusion of properties used for commercial purposes as assets and the applicability of exemptions under the Act. Summary: Issue 1: Interpretation of Section 2(ea) of the Wealth Tax Act, 1957 The appellant-revenue challenged the Tribunal's order regarding the inclusion of a property in Worli, Mumbai for wealth tax assessment. The property was initially valued at a lower amount in the return but was reassessed at a higher value due to rental income. The Commissioner (Appeals) upheld the inclusion of the property for wealth tax, while the Tribunal ruled that as the property generated income under "income from house property," it was not a non-productive commercial asset. The appellant argued that the property, being let out and generating income, fell within the definition of "assets" under section 2(ea) of the Act. Issue 2: Applicability of Exemptions under the Wealth Tax Act The respondent-assessee contended that the subject property, being rented out, was exempt from wealth tax under section 2(ea)(i)(5) of the Act. The court examined the pre- and post-amendment versions of section 2(ea) and noted that properties used for commercial purposes were not considered assets before 01.04.1997. However, post-amendment, commercial properties not used exclusively for business purposes were brought under the ambit of the Act. The court clarified that the subject property, being let out commercially, was rightly included as an asset for wealth tax assessment. Conclusion: The court allowed the appeal, quashing the Tribunal's order and remitting the matter back to the Tribunal for valuation of the subject property. The court clarified that the issue of exemptions under sub-clause (5) of clause (i) of section 2(ea) did not arise in this case.
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