2019 (4) TMI 1585 - HC - Income Tax

Assets exempt for wealth tax - definition of 'Asset' under Section 2 (ea) - Whether Assets like factory building and motor cars leased out by the Assessee to the third party was subject to wealth tax as per clause (vi) of Section 40 (3) of the Finance Act 1943? - HELD THAT - We are of the opinion that the matter deserves to be remanded back to the Income Tax Appellate Tribunal and the learned Income Tax Appellate Tribunal is requested to look into the amended position of law with effect from 01.04.1993 by insertion of definition of 'Asset' under Section 2 (ea) of the Wealth Tax 1957. We are not making any observations on the merits of the claim of the Assessee here. Therefore, without answering the Substantial Questions of Law as framed above, we set aside the order passed by the learned Tribunal on 15.09.2006 and restore the appeal to the file of Income Tax Appellate Tribunal to consider the same afresh, in accordance with law, within a period of six months for the Assessement Year 1998-1999 only.

Summary

Issues involved:
1. Interpretation of Section 40(3) of the Finance Act 1943 regarding wealth tax applicability on assets leased out by the Assessee.
2. Consideration of the definition of 'Asset' under Section 2(ea) of the Wealth Tax 1957 with effect from 01.04.1993.

Detailed Analysis:
1. The judgment addressed the issue of whether assets like factory buildings and motor cars leased out by the Assessee to a third party were subject to wealth tax under clause (vi) of Section 40(3) of the Finance Act 1943. The Income Tax Appellate Tribunal allowed the Revenue's appeal based on a previous decision of the Hon'ble Madras High Court in a similar case. The High Court admitted the appeal and framed a Substantial Question of Law regarding the Tribunal's reliance on the previous decision without considering an amendment to the law. The Assessee argued that the Tribunal should have considered the definition of 'Asset' under Section 2(ea) of the Wealth Tax 1957, which excluded commercial establishments or complexes from the ambit of 'Asset.' The High Court remanded the matter back to the Tribunal to reconsider in light of the amended law effective from 01.04.1993.

2. The second issue involved the consideration of the definition of 'Asset' under Section 2(ea) of the Wealth Tax 1957 with effect from 01.04.1993. The Assessee contended that the Tribunal failed to consider the amended definition, which excluded commercial establishments or complexes from the definition of 'Asset.' The High Court agreed with the Assessee's argument and remanded the case back to the Tribunal for a fresh decision based on the amended law. The High Court refrained from making any observations on the merits of the Assessee's claim, emphasizing the need for the Tribunal to consider the updated legal provisions.

In conclusion, the High Court's judgment addressed the issues of wealth tax applicability on leased assets and the importance of considering amended legal definitions in tax matters. The decision highlighted the necessity for tribunals to apply current legal provisions accurately and remanded the case for a fresh assessment in light of the updated law.