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TMI Blog2015 (6) TMI 728X X X X Extracts X X X X X X X X Extracts X X X X ..... ra, Judicial Member This Revenue s appeal for A.Y.2005-06, arises from order of the CWT(A)-XI, Ahmedabad dated 28.11.2011, passed in case no.CWT(A)-XI/346/ACWT-Cir.5/10-11, deleting addition of ₹ 9,58,22,800/-, in proceedings u/s.16(3) r.w.s. 17 of the Wealth Tax Act, 1957 in short the Act . 2. Facts of the case are in a narrow compass. The assessee is a company. It did not file wealth tax return at the first instance. The Assessing Officer noticed from its income tax records that it had received rent pertaining to two new sheds totaling ₹ 84,28,800/-. This made him to issue a notice u/s.17 of the Act. The assessee filed its reply admitting ownership of the factory building for the purpose of manufacturing plastic processing machinery. It stated to have allotted certain space therein to its sister concern for enabling them to carry on their business in lieu of charging rent. The assessee would also invite Assessing Officer s attention towards section 2(ea)(3) of the Act exempting such houses/buildings occupied for the purpose of business or profession. The Assessing Officer did not agree. He adopted rent capitalization method as per the schedule III of the Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises were given on hire, the necessary facilities like in built over had crane along with electrical installations, furniture and fixtures and continuous water supply for testing the machineries etc. so that each occupier can carry out the business activities without any hindrance in the said hired premises. After all, this being an Industrial Zone the prime intention of the owner of the premises is to use it either for his own business purpose or to use it commercially by giving it on hire and thereby to earn rental income; the characteristic whereof is as good as a business income only. Now for the year under reference certain space on hire was given in the old factory building to (1) Prasad Koch Technik Pvt. Ltd. on a total rent of ₹ 33 lakhs in a year and (2) KHS Machinery Pvt. Ltd. on total rent of ₹ 24 lakhs in a year; both together amounted to ₹ 57 lakhs. Whereas in a new factory building it was given on hire to (1) Prasad GWK Cool Tech Prvt. Ltd. on a total rent of ₹ 21,16,800/- in a year and (2) P P I Pumps Prvt. Ltd. on a total rent of ₹ 18,12,000/- in a year, both together amounted toRs.39,28,800/-. It is in this behalf further su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars; such an asset should not be brought to Wealth - tax through Sch. Ill rule 3 of the W.T. Rule '57. In view of the above Your Honour is requested to please treat both the factory buildings as business assets carrying on the activities of a commercial nature both should be held as exempt from Wealth tax. Please refer to above and in continuation of the written submissions D.05/01/2011 attached with the appeal filed on Dt. 12/01/2011, Your Honour's attention is invited on the further submissions stated as under, which may please be read along with the legal submissions explained in oara 3 on page 2 of the written submissions D. 05/01/2011 as stated above. That, S.2 (ea) of the Wealth-Tax Act '57, even before its amendment w.e.f. 07/04/97 was clear and unambiguous, because it had specified the buildings which were included in the definition of asset , such as guest house, residential building, farm house situated within 25 kilometers of the municipal town, but it did not include commercial building and hence buildings used for business or commercial purposes were not taxable u/s. 3 of the W.T. Act '57. Thus, in the case of Mavnak Poddar HUF v/s. W.T.O. re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, Ahmedabad. Since these industrial plots are being utilized for the purpose of business and these are revenue generating assets, accordingly, in my considered view, both these plots are exempt as per the provisions of section 2(ea) (5) of W.T. Act. This proposition is supported by the ratio of Satvinder Singh Kalra V/s. DCWT reported on (2007) 112 TTJ (Pune) 489, wherein it was held: Sub-cl. (5) covers any property in the nature of commercial establishments or complexes. In order to cover a case under sub cl.(5), it is not necessary that the property in the nature of commercial establishments or complexes should be occupied by the assessee for the purpose of any business or profession carried on by him as in the case covered by sub-cl.(3). Here, the nature and purpose of use of the property is material irrespective of the fact whether it is used or occupied either by the assessee himself or anybody else for the purpose of any business or profession carried on by them, as the case may be. To claim benefit of the sub cl.(5), one must prove and establish that the property claimed to be excluded from the definition of assets , should be in the nature of commercial establishme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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