2016 (8) TMI 232 - HC - Wealth-tax

Nature of asset - ITAT held that the properties at Worli, Mumbai owned by the assessee was outside the purview of the asset because this property was commercial property, ignoring the fact that sub-clauses (4) and (5) of clause (i) of Section 2(ea) were brought on the statute only with effect from 01.04.1999 through the Finance (No.2) Act, 1999 - Held that - Since the subject property did not fall within any of the three excluded categories enumerated under clause (i) of Section 2(ea), the said property cannot be considered to be outside the purview of the expression assets .

Summary

Issues:
Interpretation of Wealth Tax Act - Property classification as asset or not.

Analysis:
The case involved a dispute regarding the classification of a property in Worli, Mumbai under the Wealth Tax Act. The Assessing Officer taxed the property as it was given on rent and did not qualify for exemption. The CIT (Appeals) allowed the appeal based on previous Tribunal decisions. However, the ITAT dismissed the appeal, stating that the property was outside the purview of 'asset' as it was commercial property.

The main issue raised was whether the property in question qualified as an 'asset' under the Wealth Tax Act. The revenue contended that the property, being used for commercial purposes, fell within the definition of 'assets' as per the Act. The Court referred to the amendments in the definition of 'assets' and highlighted that commercial properties not used exclusively for business purposes are taxable under the Act.

The Court examined the provisions of section 2(ea) of the Act and emphasized that any property used for commercial purposes is considered an 'asset' unless falling under specific exempted categories. The Court noted that the subject property did not fall within the excluded categories and rejected the argument of exemption under a specific clause.

Referring to a previous decision, the Court held that since the property did not fall within the excluded categories, it could not be considered outside the scope of 'assets.' The revenue's argument was upheld, and the ITAT's judgment was set aside, allowing the Tax Appeal in favor of the revenue.

In conclusion, the Court ruled in favor of the revenue, emphasizing that the subject property, being commercial and not falling under any exempted category, qualified as an 'asset' under the Wealth Tax Act. The judgment highlighted the importance of the property's use for commercial purposes in determining its classification under the Act.