2011 (12) TMI 344 - AT - Wealth-tax

Whether the commercial asset used by the assessee substantially and partly given on lease are not business assets and thus includible into the net wealth u/s 2(ea) of the Wealth tax Act - The assessee in its grounds of appeal has challenged the order of the CWT(A) in confirming the action of the A.O. in holding that the commercial asset used by the assessee substantially and partly given on lease are not business assets and thus includible into the net wealth u/s 2(ea) - Since the assessee in the instant case has let out a part of its business premises and since the assessee is not in the business of letting out properties therefore the said property in our opinion is not exempt either u/s. 2(ea)(i)(3) or 2(ea)(i)(5) of the Wealth Tax Act - Appeals are dismissed

Summary

Issues:
1. Whether the commercial asset used by the assessee, substantially and partly given on lease, is considered a business asset for the purpose of Wealth Tax Act.

Analysis:
1. The assessee challenged the order of the CWT(A) confirming the AO's decision that the commercial asset used by the assessee and partly given on lease is not a business asset and should be included in the 'net wealth' under the Wealth Tax Act.

2. The AO determined the value of the property at Rs.6,19,23,163 under section 7 of the Wealth Tax Act, stating that the property did not qualify as a commercial complex or establishment as per Section 2(ea). The ld. CWT(A) upheld the AO's decision, stating that the property did not provide commercial facilities available in a commercial complex and hence fell within the definition of assets under Section 2(ea)(i) of the Act.

3. The assessee contended that the property should be considered a business asset as the company's registered office was at the property and the company's sole objective was to conduct business. Referring to legal precedents, the assessee argued that a commercial asset used for letting out properties in the business should not be considered an 'asset' for Wealth Tax purposes.

4. The Tribunal noted that the assessee was engaged in the business of Ship Management Services, not letting out properties. Citing the decision of the Karnataka High Court, the Tribunal held that business assets used for the business or profession of the assessee are exempt from Wealth Tax, while other commercial properties are taxable. Since the assessee was not in the business of letting out properties, the property in question was not exempt under the relevant sections of the Wealth Tax Act.

5. The Tribunal dismissed the grounds raised by the assessee, upholding the decision that the let-out property was taxable as per the definition of "asset" under the Wealth Tax Act.

6. Both appeals filed by the assessee were dismissed, and the order was pronounced on 30.12.2011.