9911796707
TMI Blog2009 (11) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... 000-01, the A.O. notice that the assessee has declared property income of ₹ 14,47,700/- and ₹ 3,90,653/- respectively. Accordingly to A.O., since the assessee-company was owing immovable property which was not used for business, the value of such property is includible in assessable wealth. The A.O. accordingly initiated wealth tax assessment proceedings by issuing notice under section 17 for both the assessment years. In response to the above, the assessee filed return of wealth for assessment year 1999-2000 showing value of immovable assets at ₹ 13,22,485/- and net taxable wealth at Rs. NIL. For the assessment year 2000-01, in the return filed gross value of wealth was shown at ₹ 16,81,227/- and the net value was admitted at ₹ 1,84,227/-, which was below taxable limit. In the assessment order, the A.O. noted that the assessee is earning income from house properties, which is as under :- (1) Udyog Bhavan : Appellant received rental income amounting to ₹ 1,59,000/- during assessment year 1999-2000 and ₹ 1,89,000/- during assessment year 2000-01. (2) Hazira Guest House : Appellant admitted recovery of usage charges from the stay of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - For the assessment year 1999-2000, the A.O. adopted the value as per books because as per rental method, the same works out to ₹ 1,53,81,812/-. For the assessment year 2000-01, the A.O. held that immovable property consisting of Udyog Bhavan and Hazira Guest House was liable to wealth tax. The value was per rental method was computed at ₹ 41,50,687/-, but adopted the fair market value at ₹ 4,01,50,240/- as fair market value liable for wealth-tax. 5. On appeal before the Learned Commissioner of Wealth Tax(Appeals), the assessee-company objected to the levy of wealth-tax on the aforesaid properties on the ground that both the properties were used for the business. It was contended that the Learned Commissioner of Wealth Tax(Appeals), Gandhinagar in the income-tax appeal for assessment year 2001-02 had confirmed the action of the A.O. in treating the income (i.e. recovery charges) under the head business . An alternative contention was also raised stating that even if the property situated at Udyog Bhavan was held for non-business asset, as it was let out for a minimum of 300 days in the previous year as per section2(ea) of the Wealth Tax Act. 6. After consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice was functioning in the above building. Out of the above, it had let out a portion consisting of 1,050 sq. fts. to Directorate of Petroleum, Department of Energy and Petrochemicals for their use as per directions of the Government. The appellant had only let out a small portion of its office premises to the Directorate of Petroleurn, Department of Energy and Petrochemicals and that too under directions from the Government. It had also close liaison with the Directorate of Petroleum, Department of Energy and Petrochemicals in its day-to-day business activities. It would appear that the Government had directed the appellant company to let out a portion of the building to the Directorate of Petroleum, Department of Energy and Petrochemicals with a view to further its business activities. In this context, the charges received by the appellant on letting out the office premises to Directorate of Petroleum, Department of Energy and Petrochemicals could only be regarded as business receipts. Since the property in question was used by the appellant for the purpose of business, such property will not be liable for wealth-tax. Admitting such income under the head 'house property& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax return and claimed deduction under section 24 of the Act in the tax return. If it is treated as recovery charges, then how the assessee offered the income as property income and claimed deduction under section 24. The tax has been deducted from the rental income received by the assessee. Therefore, it cannot be said that these were only recovery charges. Apart from this, the ld. D.R. relied on the decision of the Hon'ble Bombay High Court in the case of Anand Estate Pvt. Ltd. vs.- DCIT reported in [2009] 316 ITR 94 (Bom.), wherein it has been held that the word house means the building occupied by the assessee for the purpose of any business or profession carried on therein. After letting out the property, it cannot be said that both the properties in question are occupied by the assessee for its business. Therefore, the view taken by the Learned Commissioner of Wealth Tax(Appeals) be reversed and it may be held that A.O. rightly brought to tax in respect of both the properties to wealth-tax. 8. On the other hand, Shri S.N. Soparkar appeared on behalf of the assessee and relied on the submissions made before the Learned Commissioner of Wealth Tax(Appeals). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee-company and given to employees as well as officials of the joint venture partner and professionals, who rendered services at the work site. In these circumstances, it cannot be said that guest house is not occupied by the assessee-company for its business. 11. Having heard both the sides, we have carefully gone through the orders of the authorities below. It is pertinent to note that the assessee-company is not engaged in the business of letting out of properties. In the case of Anand Estate Pvt. Ltd. (supra), Anand Estate has leased out its godowns. Therefore, it was held that godowns were not used for business because those were occupied or used by the tenants for their businesses. In the instant case, the assessee-company has let out only a very small portion (i.e. less than 10%) of its office premises to the Directorate of Petroleum, Department of Energy and Petrochemicals and that too under directions from the Government. The main purpose of this arrangement was to have close liaison with the Directorate of Petroleum, Department of Energy and Petrochemicals in its day-to-day business activities. The decision of the Hon'ble Bombay High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
