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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 ..... he 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 (P.) Ltd., No. 13, Gandhi Irwin Road, Egmore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h-tax. The Tribunal ought to have appreciated that the use of the property by the lessee for business would not entitle the assessee to claim for exemption. Further, it was submitted that the assessee has not used it as a hotel and simply leased out and, therefore, the assessee is not entitled to exemption. Therefore, the order passed by the Tribunal is not in accordance with law and the same should be set aside. The learned counsel appearing for the assessee submitted that one of the objects of the assessee is letting out to rental and accordingly, the said property was leased out as a hotel and, therefore, satisfies the condition and they are entitled to exemption. He further submitted that the Income-tax Appellate Tribunal had co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-company included giving of any lands, building or other assets belonging to the assessee on lease or licence in favour of any person on such terms and conditions as may be beneficial to the asses- see. That being so, the first appellate authority following the aforesaid orders of the Tribunal, allowed the claim of the assessee. We find no infirmity in the said order of the first appellate authority. The decision of the Special Bench of this Tribunal (D-Bench, Chennai) in WTA Nos. 855 to 857(Mds)/1991 and 546 and 547(Mds)/1992 (order dated March 14, 2002) in the case of Trichy Everest Automobile Agency Pvt Ltd., also supports the assessee's claim. We, therefore, uphold the order of the first appellate authority and reject the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision in section 40(3), reads as follows : '(vi) building or land appurtenant thereto, other than building or part thereof used by the assessee as factory, godown, warehouse, hotel or office for the purposes of its business or as residential accommodation for its employees or as a hospital, creche, school, canteen, library, recreational centre, shelter, rest room or lunch room mainly for the welfare of its employees and the land appurtenant to such building or part : Provided that each such employee is an employee whose income (exclusive of the value of all benefits or amenities not provided for by way of monetary payment) chargeable under the head 'Salaries' under the Income-tax Act, does not exceed eighteen thousand rupees;' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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. Hence, we are unable to agree with the Division Bench judgments reported in K. N. Chari Rubber and Plastics P. Ltd. v. CWT [2003] 260 ITR 164 (Mad) and CWT v. Indian Ware- housing Industries Ltd. [2004] 269 ITR 203 (Mad). In the present case, the let out portions are not coming in any of the specified assets. Hence, the earlier judgment reported in CWT v. Fagun Estates P. Ltd. [2005] 272 ITR 472 (Mad) is correctly decided. The remaining ..... X X X X Extracts X X X X X X X X Extracts X X X X
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