2011 (7) TMI 229 - HC - Wealth-tax

Benefit of Section 2(ea) of the Wealth Tax Act, 1957 - assessee had been allocated land in question at Plot No.14/6, Site-IV, Sahibabad Industrial Area, Ghaziabad on 99 years lease by Uttar Pradesh State Industrial Corporation for its business - assessee had shown income under the head Profits & Gains of Business or Profession , which was also accepted by the AO - . Even when the CIT (A) while discussing the case of the assessee under the Wealth Tax Act had opined that the case of the assessee under Income Tax Act be reopened, no such steps were taken by the AO under the provisions of the Act which shows that the assessments under the Act had become final - it is clear that not only in the Assessment Years in question, the assessee had carried on its business utilizing the aforesaid asset for this purpose, but this decision was even accepted by the Department as well - Appeal is dismissed

Summary

Issues:
Challenge to orders of Income Tax Appellate Tribunal under Wealth Tax proceedings regarding exemption under Section 2(ea) of the Wealth Tax Act, 1957 for property used for business purposes.

Analysis:
The appeals were filed challenging the orders of the Income Tax Appellate Tribunal granting the respondent/assessee the benefit of Section 2(ea) of the Wealth Tax Act, holding that the property in question, used for business purposes, would be exempt from wealth tax. The assessee had been allocated land for business by the State Industrial Corporation but was denied the exemption by the Wealth Tax Officer, claiming no business activity on the property. The CIT (A) also doubted the business activities of the assessee, leading to a call for reopening of income tax proceedings. However, the Tribunal accepted the appeal, noting the business activities carried out by the assessee, as evidenced by filed income tax returns showing business income and allowed depreciation on the building constructed on the leased land.

The Tribunal highlighted that the assessee had filed income tax returns for several years showing business income and claiming depreciation on the building, which was allowed by the Assessing Officer. Despite the CIT (A) suggesting reopening of income tax proceedings, no action was taken, indicating finality of assessments under the Income Tax Act. The Tribunal emphasized that the assessee had utilized the asset for business purposes, with the Department also acknowledging this fact. Consequently, the Tribunal's decision was upheld, dismissing the appeals as no substantial question of law arose from the case.

In conclusion, the judgment addressed the issue of exemption under Section 2(ea) of the Wealth Tax Act for property used for business purposes. It highlighted the business activities carried out by the assessee, as evidenced by filed income tax returns and allowed depreciation on the building. The Tribunal's decision was upheld, emphasizing the acceptance of business activities by both the assessee and the Department, leading to the dismissal of the appeals.