2018 (9) TMI 1422 - AT - Wealth-tax

Wealth tax assessment - CWTA justification in deleting the addition to net wealth - Held that - There is no additional document or evidence filed by the assessee before the ld CITA. All the documents filed by the assessee more particularly the rent agreements and the name of the tenants occupying the warehouses were already part of income tax assessment records and that the income tax assessment for the very same assessment year i.e Asst Year 2011-12 was completed by the ld AO u/s 143(3) of the Act on 13.3.2014 . We find that the AO himself in the first para of his wealth tax assessment order states that on scrutiny of assessment records . Hence all the details that were duly appreciated by the ld CITA were already part of income tax assessment records. We also find that the revenue had disputed only Rule 46A violation and had not disputed the fact and finding of ld CITA on the ground that the subject mentioned warehouses fall within the exclusion clause of definition of assets u/s 2(ea) of the Act. The issue is already covered by the decision of this tribunal referred to supra. In these facts and circumstances we hold that there is no violation of Rule 46A of the IT Rules as alleged by the revenue in its grounds of appeal. Hence we hold that the warehouses owned by the assessee squarely falls within the exclusion clause of section 2(ea) of the Act and accordingly not liable to wealth tax. Accordingly the grounds raised by the revenue are dismissed.

Summary

Issues:
- Whether the ld CWT(A) was justified in deleting the addition to net wealth in respect of two warehouses?

Analysis:
1. The appeal by the Revenue challenged the order of the Learned Commissioner of Wealth Tax(Appeals) regarding the addition to net wealth of the assessee company in relation to two warehouses for the Assessment Year 2011-12 under the Wealth Tax Act, 1957.

2. The main issue in this appeal was whether the ld CWT(A) was correct in deleting the addition to net wealth of the assessee amounting to &8377; 23,62,43,375/- concerning two warehouses owned by the company.

3. The Revenue contended that the warehouses did not fall under the definition of commercial establishment or commercial complex as per the Wealth Tax Act. The ld AO added the value of the warehouses to the net wealth of the company, stating that no evidence was provided to prove the commercial use of the premises.

4. The assessee argued that the warehouses were used for commercial purposes, supported by various documents such as trade registration certificates, agreements with lessees, and electricity consumption connections. The assessee relied on the exclusion clause of section 2(ea) of the Act and cited relevant case laws to support their position.

5. The ld CITA agreed with the assessee's contentions, noting that a part of the warehouse was used for the company's business activities and part was leased out for commercial purposes. The ld CITA held that the warehouses fell under the exclusion clause of section 2(ea)(i)(5) of the Act, thereby not liable for wealth tax.

6. The Revenue appealed, arguing that the ld CITA admitted additional evidence in the form of rent agreements, violating Rule 46A of the Income Tax Rules. However, the Tribunal found that all documents submitted by the assessee were part of the income tax assessment records, and the issue was already covered by previous tribunal decisions. The Tribunal concluded that there was no violation of Rule 46A and upheld the decision that the warehouses were excluded from wealth tax.

7. The Tribunal dismissed the appeal of the Revenue, confirming that the warehouses owned by the assessee fell within the exclusion clause of section 2(ea) of the Act and were not liable for wealth tax.