2013 (9) TMI 957 - HC - Wealth-tax

Property in Commercial Area u/s 2(ea) Explanation 5(1) Exclusion of Value of Property Net Wealth - Whether the Tribunal was right in law and in fact in holding that the property of the assessee in commercial area let out falls under the exception clause any property in the nature of commercial establishments or complexes as per explanation 5(i) of section 2(ea) of the Wealth Tax Act - Held that - To our mind sub-clause(5) of clause(i) of section 2(ea) nowhere requires that a commercial establishment or a complex cannot be established in a house property - It only provided that any property in the nature of commercial establishment or complexes shall be excluded from the term assets as defined in clause(i) of section 2(ea) - Further that it nowhere provides that only if such commercial complex was occupied by the owner then alone the exclusion shall take effect - On both counts thus contention of the Revenue cannot be accepted - It was significant to note that exception sub-clause(3) of clause(i) of section 2(ea) pertains to any house which the assessee may occupy for the purposes of any business or profession carried on by him - Thus whenever legislature desired that exclusion may apply only if property was self occupied, it was so provided. Significantly, in sub-clause(5), there was no such insistence - No question of law arises. Revenue tried to overcome the assessee s contention that since the property does not belong to her as per section 4 of the Wealth Tax Act, same cannot form part of her assets - However, since the Commissioner (Appeals) as well as Tribunal both have centered their focus only on alternative legal contention, we have examine the same without concerning ourselves with the first contention of the assessee - Tax Appeal was dismissed.

Summary

Issues:
1. Interpretation of the exception clause in section 2(ea) of the Wealth Tax Act regarding property in commercial areas.
2. Determining whether a property used for commercial purposes can be excluded from the definition of 'assets' under the Wealth Tax Act.

Analysis:
Issue 1: The main issue in this case was the interpretation of the exception clause in section 2(ea) of the Wealth Tax Act regarding the treatment of property in commercial areas. The question raised for consideration was whether the property of the assessee, located in a commercial area and let out, falls under the exception clause of "any property in the nature of commercial establishments or complexes" as per explanation 5(i) of section 2(ea) of the Wealth Tax Act. The Assessing Officer added the value of the property to the gross wealth of the assessee, but the Commissioner (Appeals) and the Tribunal held that the property qualified for exclusion under the exception clause.

Issue 2: Another crucial issue was determining whether a property used for commercial purposes could be excluded from the definition of 'assets' under the Wealth Tax Act. The assessee had developed a commercial establishment in a rented property and sublet it to a company for office use. The Revenue contended that since the property was a house property, it should not be covered under the exception clause. However, the Court held that the property, being a commercial establishment with facilities for operating an office, qualified for exclusion under the relevant provision of the Act.

The Court emphasized that the property in question was a commercial establishment used by a company for office purposes, meeting the criteria set out in the exception clause of section 2(ea) of the Wealth Tax Act. The Court rejected the Revenue's argument that the property being a house property should not be excluded, highlighting that the Act did not require the commercial complex to be owner-occupied for exclusion. The Court found that the Tribunal and the Commissioner (Appeals) had correctly applied the statutory provisions and reached the right conclusion based on the facts presented.

In conclusion, the Court dismissed the Tax Appeal, stating that no question of law arose in the case. The judgment upheld the exclusion of the property from the assessee's net wealth under the exception clause pertaining to commercial establishments or complexes, as provided in the Wealth Tax Act.