2006 (9) TMI 118 - HC - Wealth-tax

Building is partly used by the assessee-company for its own business and partly let out to various tenants. The Wealth-tax Officer excluded a part of the main building occupied by the assessee for its own business and assessed the rest of the property to wealth-tax. He also rejected the claim of the assessee that the entire building must be exempted as a building used in the business of the assessee. - Whether, Tribunal was right in law in holding that the tenanted portion of the property was used in the assessee s business and was, therefore, excludible from the operation of section 40 of the Finance Act, 1983? - question is answered in favour of the Revenue and against the assessee

Issues Involved:
1. Whether the tenanted portion of the property was used in the assessee's business and excludible from the operation of section 40 of the Finance Act, 1983.
2. Whether advance amounts of rental deposits, electricity deposit, water tax, and generator deposits were to be allowed as liabilities in computing the net wealth of the assessee.
3. Whether the exclusion of land appurtenant to the building and reduction of market value of the property on account of restricted marketability was correctly upheld by the Tribunal.

Issue-wise Detailed Analysis:

Issue 1: Tenanted Portion of the Property
The primary issue was whether the tenanted portion of the property at No. 26, Commander-in-Chief Road was used in the assessee's business and thus excludible from the operation of section 40 of the Finance Act, 1983. The Tribunal initially held that the tenanted portion was used in the business and excluded it from wealth-tax. However, the High Court reconsidered this decision, noting that the main business of the assessee was letting out its premises. The court emphasized that the classification of income under the Income-tax Act is not relevant under the Wealth-tax Act. The court referred to the Finance Minister's speech and the specific wording of section 40(3)(vi) of the Finance Act, which excludes only certain specified assets from wealth-tax. The court concluded that the tenanted portion did not fall within the specified exclusions and was therefore subject to wealth-tax.

Issue 2: Advance Amounts and Deposits
The Tribunal had held that advance amounts of rental deposits, electricity deposit, water tax, and generator deposits should be allowed as liabilities in computing the net wealth of the assessee. The High Court did not address this issue in detail as it was not the primary focus of the Full Bench. It was referred back to the Division Bench for further consideration.

Issue 3: Exclusion of Land and Market Value Reduction
The Tribunal confirmed the Commissioner of Income-tax (Appeals)'s decision to exclude the portion of the land appurtenant to the building used in the business and to reduce the market value of the property due to restricted marketability. Similar to the second issue, the High Court did not delve into this matter in detail and referred it back to the Division Bench.

Conclusion:
The High Court concluded that the tenanted portion of the property did not qualify for exclusion under section 40(3)(vi) of the Finance Act, 1983, and was therefore subject to wealth-tax. The issues regarding the advance amounts and deposits, as well as the exclusion of land and market value reduction, were referred back to the Division Bench for further examination. The judgment emphasized the specificity and clarity of the statutory provisions and the limited scope for judicial interpretation when the language of the statute is plain and unambiguous.

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