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TMI Blog2006 (8) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... wrongly estimating the value of rented premises at Rs. 89,69,306 - rejecting the contention of the appellant rented a portion of premises during the course of business carried on by them retaining portion of premises for their own use, the same is to be excluded for the purpose of computation of wealth since, the value of premises partly used by the appellant for its own business and partly given on rent for business purposes is not an Asset within the meaning of section 2( ea ) of the Wealth-tax Act, 1957 to be included for the purpose of computation of wealth. Your appellant, therefore prays that the learned Assessing Officer be directed not to include the value of rented portion of premises for the purpose of computation of wealth of the appellant and the total wealth of the appellant be reduced accordingly." Ground No. 3 raised by the assessee is as under : "3. Without prejudice and without admitting the taxability of part of rented premises under the Wealth-tax Act, 1957, the learned Assessing Officer has erred in working out the value of the property in question under section 7(1) of the Wealth-tax Act, 1957 by multiplying the net maintainable rent by the figure of 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the factory building. The Learned AR further pointed out that no wealth tax return was filed by the assessee company as this is a factory building, which is not an asset within the purview of section 2( ea ) of the Wealth-tax Act as business assets are excluded from the purview of Wealth-tax Act. Reference was invited to the statement of income filed by assessee company wherein the compensation of Rs. 4,64,350 received in assessment year 1997-98 and Rs. 7,26,600 received in assessment year 1998-99 were shown as business income and were also assessed as business income of the assessee company by orders under section 143(3) of the Income-tax Act. The learned AR further stated that in view of the provisions of sub-clause (3) of section 2( ea )( i ) of Wealth-tax Act, the value of premises partly used by the assessee for its own business and partly, given on rent for business purposes is not an asset to be included in the net wealth of the assessee. 7. The Learned Departmental Representative for the revenue brought to our notice that prior to 1-4-1997 no commercial asset was includible as an asset under the Wealth-tax Act. After amendment with effect from 1-4-1997 new statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 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, 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-lime 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. (4)Any residential property that has been let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessees 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 relation to the assessment year 1997-98 and subsequent years." 13. Taking into consideration the series of amendments made to the definition of assets under section 2( ea ) of the Wealth-tax Act, the following position involves with effect from 1-4-1993 to 31-3-1997. Wealth-tax was chargeable only on the guest house and residential house including farm houses subject to exclusion of certain properties. The amendment was made with effect from 1-4-1997, wherein commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment 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 assessee were to be included as an asset for computing the net wealth subject to exclusion clause provided in sub-clauses (1), (2) and (3) under section 2( ea )( i ) of the Wealth-tax Act. 16. As per clause (3) to section 2( ea ) of the Act, exemption is provided to an immovable property from inclusion as part of net wealth, to a house which the assessee is occupying for the purpose of carrying on his business or profession. The provisions of the Act are clear and cat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer to verify the claim of the assessee and in case the said claim is found to be correct to adopt multiply of 10, while valuing the portion of property rented out to the tenant during the years under consideration. 20. Ground No. 4 raised by the assessee is as under : "4. Without prejudice to foregoing contentions, on the facts and circumstances of the case and in law, the Assessing Officer has erred in charging interest of Rs. 77,584 under section 17B of the Wealth-tax Act, 1957. Calculated at the rate of 2 per cent per month for the period from 1-12-1997 to 31-3-2002, without considering the fact that where no return is filed interest under section 17B is chargeable for the period commencing on the day immediately following the expiry of the time allowed for filing of return and ending on the date of completion of assessment as also without considering the reduced rate of interest under section 17B from 2 per cent to 1.25 per cent per month from 1-6-2001 and learned CIT(A) has erred in dismissing this ground of appeal. The learned Assessing Officer directed to recalculate interest chargeable under section 17B taking into consideration the above facts and the total ..... X X X X Extracts X X X X X X X X Extracts X X X X
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