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TMI Blog2012 (6) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... ccupation of asset with ownership or holding. Though the land was owned by/belonged to the assessee, but the fact remains that it was occupied by lessees from whom rental income was received and not occupied by the assessee?" The undisputed facts are that the assessee which is the State Small Industries and Export Corporation was allotted some land by the State. The assessee constructed sheds on this land and rented out the same to industrialists. The Assessee in its return of income included the rents received on account of the leasing out the sheds in its annual income. The Assessing Officer found that though the income from these sheds had been reflected in the income of the assessee but in its return for wealth tax the aforesaid sheds were not shown to be the 'assets' of the assessee. The Assessing Officer added the value of this property towards the wealth tax assets of the assessee. The appeal filed by the assessee was dismissed by the Commissioner, CIT (Appeals). Thereafter, the assessee approached the Income Tax Appellate Tribunal which held that the property in question could not be treated to be the assets of the assessee since the same had only been allotted to it and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State, Sh. Kuthiala submits that the assessee had domain and legal control over the property and as such this property should be deemed to belong to the assessee. 4. On the other hand Sh. Vishal Mohan, learned counsel for the respondent, has made two fold submissions. He submits that in view of the law laid down by the Apex Court in Nawab Sir Mir Osman Ali Khan v. Commissioner of Wealth Tax [1986] 162 ITR 888/28 Taxman 641 (SC), an asset can be deemed to be belonging to the assessee only when he acquires legal ownership thereof. He further submits that assuming that the assets belong to the assessee then also in terms of Section 2(ea) the assessee should be deemed to be in constructive occupation of the sheds since they were rented out for the purpose of business of profession. 5. We may, first make reference to the judgment relied upon by the assessee i.e. Nawab Sir Mir Osman Ali Khan (supra). It would be pertinent to mention that in this case the assessee had entered into agreements agreeing to sell some of his property in favour of certain individuals. The assessee received the entire sale consideration and handed over possession of the property in question to the vendees. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be person to whom the property belongs. He further submits that the legislature has not amended the provisions of the Wealth Tax Act and therefore this judgment applies to his case with full force. 7. On the other hand Sh. Vinay Kuthiala, places reliance on a Full Bench judgment of the Andhra Pradesh High Court in Nawab Mir Barkat Ali Khan v. Commissioner of Wealth Tax [1997] 226 ITR 654/94 Taxman 84. The Full Bench of Andhra Pradesh High Court considered the Judgment of the Apex Court delivered in Nawab Sir Mir Osman Ali Khan's case (supra) and held as follows: "The position is that though all statutes including the statute in question should be equitably interpreted, there is no place for equity as such in taxation laws. The concept of reality in implementing a fiscal provision is relevant and the Legislature in this case has not significantly used the expression 'owner' but used the expression 'belonging to'. The property in question legally, however, cannot be said to belong to the vendee. The vendee is in rightful possession only against the vendor. Speaking for myself, I have deliberated long on the question whether in interpreting the expression 'belonging to' in the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer had not been effected as contemplated under section 54 of the Transfer of Property Act or under the Registration Act. ** ** ** It is worth noticing here that the provisions of section 4 of the act were not brought to the notice of the Supreme Court and were not considered in Nawab Sir Mir Osman Ali Khan v. CWT [1986] 162 ITR 888 (SC). There was, however, no occasion for consideration of those provisions in the other cases referred to above. For the purpose of construing the expression "belonging to" in section 2(m) of the Act and in view of the judgment of the Supreme Court in Nawab Sir Mir Osman Ali Khan's case [1986] 162 ITR 888, the judgments of our High Court in CIT v. Nawab Mir Barkat Ali Khan [1974] Tax LR 90, Nawab Mir Barkat Ali Khan v. CIT [1988] 171 ITR 541 and CIT v. Sahney Steel and Press Works (P.) Ltd. [1987] 168 ITR 811, will not be of much assistance much less will they be binding authorities on the interpretation of the expression "belonging to" in section 2(m) of the Act for the term considered in those income tax cases was "owner" within the meaning of section 9 of the 1922 Indian Income-tax Act (section 22 of the 1961 Income-tax Act). For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner" within the meaning of S. 22 of the Act in its practical sense, leaving the husk of the legal title beyond the domain of ownership for the purpose of this statutory provision. The reason is obvious. After all, who is to be taxed or assessed to be taxed more accurately - a person in receipt of money having actual control over the property with no person having better right to defeat his claim of possession or a person in legal parlance who may remain a remainder man, say, at the end or extinction of the period of occupation after, again say, a thousand years? The answer to this question in favour of the assessee would not merely be doing palpable injustice but would cause absurd inconvenience and would make the Legislature to be dubbed as being a party to a nonsensical legislation. One cannot reasonably and logically visualise as to when a person in actual physical control of the property realizing the entire income and usufructs of the property for his own use and not for the use of any other person, having the absolute power of disposal of the income so received, should be held not liable to tax merely because a vestige of legal ownership or a husk of title in the long run ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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