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2020 (12) TMI 750 - AT - Wealth-taxWealth tax assessment - property which is subject to wealth tax by the AO is not residential or commercial property and it is an industrial property not liable for wealth tax - rental income from the said property was treated as income from house property. According to the assessee, it is not an asset liable for wealth tax - Assessing Officer treated it as an asset liable for wealth tax - HELD THAT:- The provisions of the Act are clear and categoric that all immovable assets falling within the definitions are to be included as the wealth of the assessee unless the same are excluded by the exclusion clause. On reconstruction of the definition clause, after amendment w.e.f 1st April, 1997, commercial properties are to be included in the net wealth of the assessee and exemption is being allowed to such ‘house’ of the assessee which is occupied for carrying out his business or profession by assessee himself, as it is provided in the sub clause (3) to s. 2(ea)(i) of the Act, business or profession carried on by him. The portion rented out by the assessee against which compensation has been received and assessed as business income is the portion in which tenant of the assessee is carrying out his business or profession. Mere assessment of the rent or compensation under the head ‘business income’ does not commensurate with the assessee carrying on his business or profession in the said property. In the facts of the present case, the assessee is not carrying on the business of letting out properties. Accordingly, the portion of property which is occupied by the tenant is to be included as an asset within the definition provided in section 2(ea)(i) of the Act at the relevant time. If an asset is used for the purpose of business or profession then it is not an "asset" for the purpose of taxability under WT Act. Hon'ble Bombay High Court in the case of Parekh Traders [1983 (9) TMI 39 - BOMBAY HIGH COURT] wherein it was held that property owned by the assessee subject to letting year to year, income on which taxed as “income from house property” so as to take advantage of deduction u/s.24 of the Act and treating the same property as business asset to claim exemption u/s.2(ea) of W T Act. In the present case also the assessee’s income from letting out the property is assessed as income from house property and the assessee has availed deduction u/s.24 of the Act and for the purpose of wealth tax it cannot be considered as business asset so as to exempt from wealth tax. In our opinion, it is rightly to be considered as an asset liable for wealth tax. Value of industrial land to be reduced from value of the factory building so as to ascertain the net asset value - The assessee in this case not demonstrated that industrial land is not part of the factory building let out to the tenant. Being so, it should be considered as part of the factory building and to be included in the asset liable for wealth tax. Notional interest computed by AO on the deposit received by the assessee to be excluded from net maintainable rent - It is appropriate to consider the annual value considered by the Assessing Officer as per Section 23 of the Income Tax Act for the purpose of income tax assessment so as to determine the net maintainable rent for the purpose of wealth tax. The Assessing Officer in the same assessment year cannot consider one rent for determining the annual value for the purpose of Income Tax and different rent for wealth tax purpose. Accordingly, we direct the Assessing Officer to adopt the same annual value as per Section 23 of IT Act for determining the net maintainable rent. Accordingly, he determined the gross maintainable rent and correspondingly he shall give deduction towards municipal tax and G.M.R. It is ordered accordingly.
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