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2015 (8) TMI 432 - AT - Wealth-taxDetermination of net wealth of assessee - Renting of property - Business Income or asset - Held that - CWT(A) while treating the asset as a commercial property has followed the decision of the Tribunal in assessee s own case 2015 (6) TMI 252 - ITAT PUNE in the 263 proceedings and has also relied on various other decisions and since the Ld. Departmental Representative was unable to distinguish the findings given by the CWT(A) by placing any cogent material, therefore, we do not find any infirmity in the order of the CWT(A) deleting the addition made by the WTO. As already mentioned earlier, the AO in the order passed u/s.143(3) had treated the rental income from the property as business income which was set-aside by the CIT u/s.263 of the I.T. Act. On appeal by the assessee the Tribunal quashed the order passed u/s.263. Therefore, once the rental income from the property is treated as business income and the character of the asset remains as commercial establishment or commercial complex as envisaged in sub-section 5 of clause (i) of section 2(ea) of the Wealth Tax Act, the same cannot be brought into the ambit of Wealth as the same falls within the exclusions provided in clause (i) of section 2(ea) of the Wealth Tax Act. - Decided against Revenue.
Issues Involved:
1. Whether the building "Cybernex" is an asset within the meaning of sub-clause (4) of clause (i) of section 2(ea) of the Wealth Tax Act. 2. Justification of excluding the value of "Cybernex" from the net wealth of the assessee. 3. Whether the property in question is a commercial establishment or commercial complex as envisaged in sub-clause (5) of clause (i) of section 2(ea) of the Wealth Tax Act. Detailed Analysis: Issue 1: Asset Classification under Wealth Tax Act The primary issue was whether the building "Cybernex" qualifies as an asset under sub-clause (4) of clause (i) of section 2(ea) of the Wealth Tax Act. The Assessing Officer (AO) argued that the property was rented for less than 300 days and thus should be considered an asset liable to wealth tax. The assessee contended that "Cybernex" is a commercial property designed and approved as an IT Park, providing various services and facilities, and thus should not be classified under the said sub-clause. Issue 2: Exclusion of "Cybernex" from Net Wealth The Commissioner of Wealth Tax (Appeals) [CWT(A)] held that the AO was not justified in including the value of "Cybernex" in the net wealth of the assessee. The CWT(A) based this decision on the Tribunal's earlier ruling in the 263 proceedings, which established that the rental income from "Cybernex" should be treated as business income, thus classifying the property as a commercial complex. The Tribunal upheld this view, noting that the AO had initially treated the income as business income before it was set aside by the CIT under section 263, a decision later quashed by the Tribunal. Issue 3: Nature of the Property The Tribunal examined whether "Cybernex" is a commercial establishment or complex under sub-clause (5) of clause (i) of section 2(ea) of the Wealth Tax Act. The Tribunal referred to various precedents, including the Hon'ble Supreme Court's decision in Shambhu Investments (P) Ltd. vs. CIT and other High Court rulings, which support the classification of properties providing extensive and specialized services as commercial establishments. The Tribunal concluded that "Cybernex," with its advanced specifications and services, qualifies as a commercial complex, thus falling within the exclusions provided in the Wealth Tax Act. Conclusion: The Tribunal upheld the CWT(A)'s decision to exclude the value of "Cybernex" from the net wealth of the assessee, affirming that the property is a commercial complex and not an asset under section 2(ea) of the Wealth Tax Act. The appeal filed by the Revenue was dismissed, with the Tribunal finding no infirmity in the CWT(A)'s order. The Tribunal's decision was based on the consistent treatment of the rental income as business income and the comprehensive nature of services provided by "Cybernex," aligning with established legal precedents.
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