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TMI Blog2012 (8) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 - MURUGESAN D., JANARTHANA RAJA P. P. S., JJ. JUDGMENT P. P. S. Janarthana Raja J.- The above tax case appeals are filed by the Commissioner of Wealth-tax-I against the order of the Income-tax Appellate Tribunal, Madras "D" Bench, dated March 19, 2004, in W. T. A. No. 124-128/Mds/97. These appeals were admitted on September 28, 2005, on the following substantial questions of law : "1. Whether, in the facts and in the circumstances of the case, the Tribunal was right in holding that the property leased out is not assessable to wealth-tax and excludible from the operation of section 40 of the Finance Act, 1983 ? 2. Whether, in the facts and in the circumstances of the case, the Tribunal was right in holding that the property let out was used in the assessee's business and was, therefore, excludible from the operation of section 40 of the Finance Act, 1983 ?" The brief facts arising out of the case are as follows : The assessee is a company. The relevant assessment years are 1988-89 to 1992-93. For the above assessment years, the assessee filed returns of income and claimed exemption in respect of the property, viz., Donatus Victoria Estates and Hotels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax and is in accordance with law and the same should be confirmed. Heard the learned counsel on both sides and perused the documents available on record. Even though the memorandum of association of the assessee-company was not filed along with the typed set of papers, but the same has been extracted by the Commissioner of Income-tax (Appeals) and the same is found in paragraph 14 of the order of the Commissioner of Income-tax (Appeals). From the reading of the said extract, it is clear that one of the main objects of the assessee-company is to give any land, building or other assets belonging to the company on lease or licence in favour of any person, company or firm, and to give on hire immovable properties of the company and any machinery, plant, furniture or fixtures or any other movable property whatsoever to any person, company or firm upon such terms and conditions as may be beneficial to the company. The learned counsel appearing for the assessee submitted that the property was leased out as a hotel and the same is used as a hotel. The only contention of the appellant is that the assessee himself has not used it as a hotel. The Income-tax Appellate Tribunal in paragra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such assessee's business. When the business of the assessee is leasing of such machines, the machines so leased out are being used for the purpose of the assessee's business. The income by way of hire charges which the assessee receives is also taxed as business income of the assessee.' The above judgment considered the scope of section 32A of the Income-tax Act and held that the assessee is entitled to the investment allowance on plant and machinery let out to the third parties. Further, it was held that the let out plant and machinery were used in the business of leasing. Hence, the apex court granted investment allowance under section 32A of the Income-tax Act. In the present case, the articles of association indicate the main object, which is extracted hereunder : '2. To acquire by purchase, lease, exchange or otherwise farms, lands, buildings and hereditaments of any tenure of description and any estate or interest therein, and any rights over or connected with lands so situated and to turn the same to account as many seem expedient and in particular by preparing building sites and by constructing, reconstructing, altering, improving, decorating, furnishing and maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss are exempt from the purview of the wealth-tax. Once the let out assets come within the specified clause as contemplated under section 40(3)(vi) of the Finance Act, the assessee is certainly entitled to exemption from the Wealth-tax Act. The Division Bench judgment of this court reported in CWT v. Indian Warehousing Industries Ltd. [2004] 269 ITR 203 (Mad), following the principles enunciated by this court judgment reported in K. N. Chari Rubber and Plastics P. Ltd. v. CWT [2003] 260 ITR 164, held that, as per section 40(3)(vi) of the Finance Act, there is an additional requirement that the building should be used by the assessee as godown or warehouse for the purpose of its business. We are of the view that the let out assets are used by the assessee in its leasing business. If the leased out assets such as, godown, warehouse, hospital or other assets, come within the specified assets in section 40(3)(vi) of the Finance Act, certainly the assessee is entitled to the exemption, because the same is used in leasing business. The view of the Division Bench judgment that the leased assets are not used for the purposes of business, is contrary to the Supreme Court judgment cited supra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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