Wealth Tax Act-Scope of Sec.2(e) in case of lease. - Income Tax - 1665/CBDT

INSTRUCTION NO. 1665/CBDT Dated: December 10, 1985 Audit has brought to the notice of the Board case where a theatre was leased out to a firm for a period of 6 years initially with a right to the lessee to extend it for another 5 years on the same terms and conditions. The right to renew the lease was an interest in the property and the period of lease was 11 years. Therefore, the right which was available to the lessee was an asset within the meaning of section 2(e) of the Wealth-tax Act and liable to Wealth-tax. The audit objection was resisted by the Commissioner of Income-tax in the light of the Bombay High Court decision in the case of Seth Ram Nath K. Daga (127 ITR 371). 2. However, the above decision in the case of Seth Ram Nath K. Daga has not been accepted and an SLP has been filed before the Supreme Court. It has, therefore, been decided that assessments in all such cases may be made following the interpretation given by the Audit to avoid possible loss of revenue. 3. These instructions may be brought to the notice of all the officers working in your charge.