1996 (12) TMI 96

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..... fied asset under section 40(3) of the Finance Act, 1983." 2. The assessee-company owns certain flats which were let out to a sister concern, M/s. IPCA Laboratories P. Ltd. The value of these flats was not disclosed in the return of wealth on the ground that the assets have to be excluded from the category of specified assets as defined in section 40(3)(vi) of the Finance Act, 1983, which revived wealth-tax on closely held companies with effect from 1-4-1984. The relevant provision reads as under :-- "40(3). The assets referred to in sub-section (2) shall be the following, namely :-- (i) to (v) (vi) building or land appurtenant thereto, other than building or part thereof used by the assessee as factory, godown, warehouse, cinema hou .....

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..... or the accommodation of specified persons in clause (vib). In the present case, the flats in question were not used by the assessee for the purpose of its own business as they were leased out to a sister concern. It is not disputed that the sister concern used the flats as residential accommodation for its employees. But, as the flats were leased out, it is held that they are not used for the purposes of the assessee's business as required by the plain language of clause (vi) of section 40(3) and so it is claimed that the assessee is not entitled for the exclusion of the value of the flats in question from the levy of wealth-tax. 3. The learned counsel for the assessee, on the other hand, has pleaded that it is sufficient if the flats are .....

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..... ee in its own business. As the Tribunal did not have the benefit of these decisions, though not directly on the point, which was of relevance to understand the scope of user by the assessee, we are inclined to accept the contentions of the revenue. We find that under the clear language of clause (vi) of section 40(3) reproduced above, exclusion is warranted only for buildings which are used by the assessee as factory, godown, etc., for the purposes of its business. The same condition seems to apply for residential accommodation also. This follows from the syntax of the clause. It may also be noticed that even in clause (vib), there is a reference to user of the accommodation by the director, manager, etc., of the assessee. Clause (vib) is r .....

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