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TMI Blog2006 (8) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... n 'asset' under section 2( ea )( i )(3) of the Wealth-tax Act, 1957. The appellant submitted that since the property was partly used by the appellant and partly let out commercial premises and therefore, is exempt for the purpose of levy of wealth-tax under the Wealth-tax Act. 3. Shri H. N. Shah, Learned Counsel appeared for the assessee and Shri Sandeep Kumar, Departmental Representative appeared for the revenue and put forward their rival submissions 4. The brief facts of the case are that the assessee is the owner of a building known as New Prakash Cinema Building House at N.M. Joshi Marg, Mumbai. Part of the building was being used by the assessee for its office. The building was leased to M/s. Siti Cable Network Pvt. Ltd., as per lease agreement dated 23-4-1996 with effect from 1-1-1996 on a monthly rental of Rs. 1 lakh along with security deposit of Rs. 2 crore, with escalation clause of increase in rent by 10 per cent every year. The rental income was declared and assessed under the head 'Income from house property'. From the perusal of the records, it transpired that assessee was occupying 600 sq. ft. area and balance area of 5,400 sq. ft. was leased out and the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers from local limits of any municipality (whether known as municipality, municipal corporation or by any other name or a cantonment board, but does not include: (1)a house meant exclusively for residential purpose and which is allotted by a company to an employee or an officer or director who is in whole-time employment, having a gross annual salary of less than two lakh rupees; (2)any house for residential or commercial purposes which forms part of stock-in-trade; (3)any house which the assessee may occupy for the purposes of any business or profession carried on by him. The above definition was in force between 1-4-1997 to 31-3-1999. The definition of 'assets' under section 2( ea ) of Wealth-tax Act underwent an amendment with effect from 1-4-1999 and it was provided as under: ( i )Any building or land appurtenant thereto (hereinafter referred to as 'house'), whether used for residential or commercial purpose or for the purpose of maintaining a guest house or otherwise including a farmhouse situated within twenty-five kilometers from local limits of any municipality (whether known as municipality, municipal corporation or by any other name or a cantonment board, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of assets under section 2( ea ) and the necessity for amendment was explained by way of Departmental Circular No. 762, dated 18-2-1998, which elaborates the scope and effect of the substitution of section 2( ea )( i ) by the Finance (No. 2) Act, 1996, as under: 'Amendment of the term 'assets' 57.1 The term 'assets', on which tax is to be levied is defined in clause ( ea ) of section 2. This definition includes any guest house and any residential house (including a farm house situated within 25 kms. of the local limits of any municipality) except the assets mentioned in sub-clauses (1) and (2) of this clause. If the residential houses have been taken as assets, there seems to be no reason why commercial properties, other than those used by the assessee wholly and exclusively in his business or profession, should also be not taken as assets. By an amendment, commercial buildings, which are not occupied by the assessee for the purpose of his business or profession, other than the business of letting out properties, shall be brought to tax under the Wealth-tax Act, 1957. 57.2 This provision will take effect from the 1st day of April, 1997, and, accordingly, will apply in rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 300 days in the previous year and also any property in the nature of commercial establishment or complexes. 15. The issue before us is relevant to the period 1-4-1997 to 31-3-1999, wherein though the definition of asset was elaborated by including commercial properties within the ambit of definition of assets but the exclusion was limited to only in respect of any house which the assessee may occupy for carrying on his business or profession. The subsequent amendment with effect from 1-4-1999 by excluding any property in the nature of commercial establishment or complexes in addition to a house which is being occupied for the purpose of carrying on of business or profession by the assessee enlarges the scope of exclusion from the definition of asset under section 2( ea ) of the Wealth-tax Act. The amendments to section 2( ea ) of the Wealth-tax Act one after the other clearly explains the nature of assets to be included as part of definition under section 2( ea ) of the Wealth-tax Act. In the period between 1-4-1997 to 31-3-1999, the definition of asset was an enlarged definition wherein in addition to the residential properties, the commercial properties owned by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of property which is occupied by the tenant is to be included as an asset within the definition provided in section 2( ea )( i ) of the Act at the relevant time." 9. The Mumbai Bench of Tribunal in Mafatlal Industries Ltd.'s case ( supra ) had held that in the absence of assessee not letting out the properties as part of their business and letting the same from year to year income from which is assessable as income from property is chargeable to wealth-tax. Reliance by learned AR on the decision of Hon'ble Gauhati High Court is misplaced due to amended provisions of the Act. 10. In the facts of the present case, the assessee has not established that it is letting out its property as part of its business and it is also an admitted fact that rent received by assessee is being assessed as income from house property. Accordingly, the portion of the property which is occupied by the tenant is to be included as an asset within the definition provided under section 2( ea )( i ) of the Wealth-tax Act and we direct the Assessing Officer to include the value of the said portion of the property in the taxable wealth of the assessee. 11. In the result, both the appeals filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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