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TMI Blog2015 (3) TMI 771X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing as factory. Therefore, such portion of the building was rightly included by the lower authorities in the net wealth of the assessee company. - Decided against assesseee. - Civil Appeal No. 5165 of 2003 - - - Dated:- 10-3-2015 - A. K. Sikri And Rohinton Fali Nariman,JJ. For the Appellants : Mr Sanjeev Sabharwal, Sr. Adv., Ms Bina Gupta, Adv., Mr Ranjit Raut, Adv. Ms Megha Kamthan, Adv. and Mr Abhay A Jena, Adv. For the Respondents : Mr Guru Krishna Kumar, Sr. Adv., Mr Arijit Prasad, Adv. Ms Purnima Bhat Kak, Adv., Ms Anil Katiyar, Adv. and Mr B V Balaram Das, Adv. ORDER In this case we are concerned with wealth tax on a property situated at Plot No.39, Site IV, Sahibabad. The concerned assessment year is 1984-1985. The facts are that the appellant before us is a company which manufactures bed sheets. It contends that it's own subsidiary company namely, M/s Dior International Pvt. Ltd., is a company under the same management and is doing processing work, namely, dyeing, for the assessee company in a part of the factory building situate at the aforesaid property. It is not disputed that M/s Dior International Pvt. Ltd. installed its own machiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g used as residential accommodation by any director, manager, secretary or any other employee of the assessee, such employee holding not less than one per cent of the equity share of the assessee or by any relative of any person who holds not less than one per cent of the equity share of the assessee. By an order dated 9th March, 1989, the assessing authority held that on these facts they had no hesitation in holding that the part of the building given to M/s Dior International Pvt. Ltd. on licence is not being used for the assessee's own business and therefore, the assessee is not entitled to exemption in respect of the said part of the Sahibabad building property. On an appeal to the Commissioner of Income Tax (Appeals), the Commissioner by judgment dated 28th January, 1993 agreed with the assessing authority and dismissed the appeal. The Commissioner opined that the assessing officer should refer the matter to the Valuation Officer under Section 16A (1)(b)(ii) for the valuation of the portion given on rent by the appellant company to its licensee. In a further appeal to the Income Tax Appellate Tribunal, the Income Tax Appellate Tribunal agreed with the view of the autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations of the Hon'ble Supreme Court at page 314 of 231 ITR, on which reliance was placed by the learned counsel for the assessee, do not advance the case of the assessee in as much as those observations were made in the context of the language of Section 32A. In the present case, it is not the case of the assessee to lease out the building. Further, mere user for the purpose of business is not sufficient for the purpose of claiming exemption u/s 40 of Finance Act, 1983. As observed earlier, the use must be by the assessee himself as factory, that is, for the purpose of business of manufacturing carried on by him. Since in the present case admittedly the premises were actually used by the lessee and not by the assessee, we are unable to accept the contention of the learned counsel for the assessee. Mr. Sabharwal, learned Senior counsel for the appellant, has argued two points before us and has relied on a number of judgments. According to learned counsel, the object sought to be achieved by Section 40 is paramount. He pointed out that wealth tax was abolished so far as companies were concerned by the Finance Act, 1960 and revived qua closely held companies only by Section 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in that user of the building is established on the facts of the case and, therefore, the asset of the company is being used productively and not otherwise. However, super-added to this condition is another condition, namely, that such user must be by the assessee . Not only must it be by the assessee but it must also be for the purpose of its business . It is clear on the facts here that the appellant before us and M/s Dior International Pvt. Ltd are doing their own business and are separately assessed as such. Mr. Guru Krishan Kumar, learned Senior counsel is right in contending that on facts the charging of ₹ 20,000/- per month as licence fee by the appellant assessee from M/s Dior International Pvt. Ltd. changes the complexion of the case. It is clear that once this is done, the two companies, though under the same management, are treating each other as separate entities. Also, he correctly pointed out that for the job work done by M/s Dior International Pvt. Ltd., M/s Dior International Pvt. Ltd. was charging the assessee company and this again established that two companies preserved their individual corporate personalities so far as the present transaction is concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness income. The passage cited at page 455-456 of the report again makes it clear that this judgment does not in any manner further the argument of the assessee in the present case. It goes as far as saying that on the facts here ₹ 20,000/- licence fee per month ought to be treated as business income. This may well be correct but as we have pointed out hereinabove, this fact does not further the assessee's case in that the very factum of charging ₹ 20,000/- per month makes it clear that the assessee treated itself as a corporate personality separate from its subsidiary. Learned counsel for the appellant then cited a judgment of this Court reported in 288 ITR 1 (SC), namely, S.A. Builders Ltd. v. Commissioner of Income Tax in which a question arose in the context of Section 36 of the Income Tax Act as to whether an interest free loan given to a sister concern can be said to be for the purpose of business . This does not take the assessee very much further. An interest free loan may well on facts be treated to be for the purposes of business so far as Section 36 of the Income Tax Act is concerned. However, on facts here we are concerned with a very different pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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