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TMI Blog2012 (4) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in the business of manufacturing and sale of glass products, especially of laboratory items. As the assessee was facing some adverse conditions to carry on its manufacturing activities, it entered into an agreement with M/s. Borosil Glass Works Lt., Mumbai to lease out the manufacturing facilities owned by the assessee company. The assessee executed a lease deed with M/s. Borosil Glass Works Ltd., through which M/s. Borosil Glass Works Ltd., the lessee, has been granted absolute and unfettered right to exploit the said plant and machinery alongwith land and buildings. All these things happened in the previous year relevant to the assessment year 1995-96. The assessee was also carrying out certain processing works in a part of the buildi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lth-tax returns. Returns were filed declaring 'Nil' wealth. The objections of the assessee were overruled and ultimately wealth-tax assessments were completed under section 16(3) of the Wealth-tax Act. The assessee was brought to wealth-tax by virtue of the impugned assessments. 5. The wealth-tax assessments were taken in first appeals before the Commissioner of Income-tax (Appeals). Two grounds were raised before the Commissioner of Income-tax (Appeals). The first one was that the wealth-escaping assessments were illegal. The second ground was that the assets leased out by the assessee to M/s. Borosil Glass Works Ltd. could not be treated as taxable assets in view of section 2(ea) of the Wealth-tax Act. The Commissioner of Income-tax (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to appreciate exploitation of commercial assets, namely factory building along with production machinery with high tension K.W. Power would qualify as business income and thus qualifies in terms of section 2(ea)(i)(3) of the Wealth-tax Act since commercial exploitation is one of the objects of the company. a. The CWT(A) ought to have appreciated that the decision of K.N. Chari Rubber and Plastics P Ltd. 260 ITR 164 Mad. Is not applicable to the facts for the reasons more elaborately discussed in the written submissions and in any event it is no longer good law since the said decision has been overrules by the larger Bench in the case Fagun & Co. 286 ITR 297. b. The philosophy behind section 2(ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment years were only processed under section 143(1). We reject the contentions of the assessee on the question of jurisdiction to complete the impugned assessments. 8. Now, regarding the merits of the case, we have to examine the issue carefully. The assessee was carrying on the business of manufacturing glass products including laboratory items. The assessee was carrying on the business from the previous year relevant to the assessment year 1995-96. In fact, the assessee company has carried on the said manufacturing business on its own for the assessment years 1995-96 and 1996-97. The land, buildings, plant and machineries, all are, therefore, in the nature of commercial/industrial assets. 9. The assessee company was carrying on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re cannot be any case that the nature of the assets has been changed. The commercial assets exploited by the assessee for the purpose of its business remained the same and its character has not been converted into a house property or non commercial asset. Therefore, whether the business of manufacturing glass products is carried on by the assessee company itself or by M/s. Borosil Glass Works Ltd., the lessee, the assets including land, buildings, plant and machineries always remained as properties in the nature of commercial establishments occupied for the purpose of carrying on business. In other words, it was always economic/productive asset. Section 2(ea) excludes such assets from the definition of assets operative from first day of Apr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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