TMI Blog2006 (9) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... complexes, the exemption shall be available to all such properties and cannot be restricted to anyone of them. Thus, we now proceed to examine the facts and circumstances of the present case. With regard to the property at 1002, 2nd Floor, Budhwar Peth, Pune, we have perused the respective purchase deed, lease agreement, electricity bill. Details of the amount of rent received by the assessee in respect of this property has also been furnished by the assessee. The property is not being used for the purpose of any business or trade. No evidence as to the nature of the property supported by any municipal tax paid has been furnished. The property has been let out to the said Institute. Therefore, the property in question is also not covered by sub-clause (3) of clause (i) of sub-section (ea) of section 2 of the Act. From the point of user of this property being used by the National Eggs Research Institute of Indian Council of Medical Research, New Delhi for the purpose of dispensary-cum-laboratory, it cannot be said that it is in the nature of a commercial establishment or complex. Therefore, the assessee's claim in respect of this property at 1002, 2nd Floor, New Budhwar P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the licensee at the relevant point of time. As to the nature of the property, there is no dispute that it is in the nature of commercial property being in the nature of office premises. But the second criteria as to whether the property is used for the purpose of business or not is not established from the papers available on record so as to treat the same as a commercial establishment within the meaning of sub-clause (5) of clause (i) of sub-section (ea) of section 2 of the Act. This matter is restored back to the file of the Assessing Officer for further enquiry and verification and then to decide the matter in accordance with the observations made above, and as per law after providing reasonable opportunity of being heard to the assessee. In the result, all the appeals filed by both the assessees are partly allowed as above. - C.L. Sethi Judicial Member And Ahmad Fareed Accountant Member For the Appellant : S.U. Pathak. For the Respondent : B.S. Bhist. ORDER PER C.L. SETHI, JUDICIAL MEMBER :- In these eight appeals, four appeals each filed by two different assessees, pertaining to the assessment years 1999-2000, 2000-01, 2001-02 and 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for the purpose of levy of wealth-tax. 3. At this stage, we also consider it useful to take note of the grounds of appeal taken by one of the assessees, i.e., Shri Satvinder Singh Kalra, before the CIT(A) in the assessment year 1999-2000, which reads as under: The Assessing Officer erred in denying the assessee's claim for excluding let out properties being one-half share in four properties viz. office at 1002, 2nd Floor, New Budhwar Peth, Pune valued at Rs. 5,92,493, office at 24, East Street, Yogesh House, Pune valued at Rs. 93,21,358, office at Shankar Parvati Chamber, Dhole Patil Road, Pune valued at Rs. 1,36,16,044 and basement at Shankar Parvati Chamber, Dhole Patil Road, Pune valued at Rs. 18,596 which were totalling to Rs. 2,35,48,491 from computation of net wealth. The appellant pleads that the subject properties do not fall within the definition of assets as per the specific exclusion under section 2(ea)(i)(5). 4. The aforesaid properties referred to in the grounds of appeal were included in the taxable wealth of the assessee by treating them as assets defined under section 2(ea) of the Wealth-tax Act by the Assessing Officer in all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 items specified in sub-clauses (1) to (5). In sub-clauses (1) to (3) specified house properties have been excluded. In sub-clause (4) residential house property let out for 300 days in the previous year is excluded. 7. Sub-clause (5) reads as follows: any property in the nature of commercial establishment or complexes . 8. The word 'and' means:- (a) one or more - used to indicate an undetermined number or amount. (b) All - used to indicate a maximum number or amount. The word 'property' in the context of the section means any real estate which an assessee has exclusive right to possess, enjoy and dispose off. Considering the fact that in sub-clauses (1) to (4) the words 'house and residential property' have been used, it is obvious that the word 'property' in this sub-clause refers to property other than a house or residential property. The words in the nature of mean bearing or having the character of. The words 'commercial establishment or complexes' describe the kind of property envisaged in contradistinction to residential house property or stock-in-trade or property used for own business. We su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the value of commercial establishment or complex would not be included in the net wealth. 5. From the submissions made by the assessee as stated in above para, the assessee has claimed the exemption under section 2(ea)(5) of the Wealth-tax Act, 1957 in respect of above mentioned properties. As per the said section, the property is not an asset under section 2(ea) if the same is in the nature of commercial establishments or complexes. The provisions of this section are applicable in the case or property as a single unit because the word used therein is any property in the nature of commercial establishments/complexes . In the case of the assessee, there is no single unit but there are four properties in four separate buildings. The contention of the assessee that the above stated properties are in the nature of commercial establishment/complexes etc. is therefore not acceptable. Moreover, on verification of income-tax records of the assessee, it is pertinent to mention here that the assessee treated income derived from these properties as Income from house properties . Thus, it is clear that the properties given on rent are in the nature of commercial house properties but n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain specified assets'. By the amendment of Finance (No. 2) Bill, 1998 notes on clauses, it was proposed to exclude certain residential properties and any properties in the nature of commercial establishment or complexes form the definition of assets. There is no doubt that the assessee's properties are productive, commercial assets. It is also significant to note that in the Notes on Clauses Finance (No. 2) Bill, 1998 the words used are 'It is proposed to exclude any property in the nature of commercial establishment or complex form the definition of asset'. The use of singular in the notes clearly support our submissions that the use of the plural in section 2(ea)(i)(5) includes the singular. Even otherwise a literal understanding of the section results in a dilemma, if not an absurdity. In case of an absurdity the statute needs to be interpreted reasonable and in consonance with justice adopting a purposive approach. In the event of two views being possible. It is well-settled that the view favourable to assessee should be adopted. 8. After considering the assessee's submissions, the CIT(A) held that the properties in question were assets within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and appurtenant thereto whether used for residential or commercial purposes is an asset. Thus, the definition of assets as contained in section 2(ea) is exhaustive definition because the word used is means. Now from the exhaustive definition of assets as contained in section 2(ea) of the Wealth-tax Act, 1957, it is absolutely clear that assets means any building or land appurtenant thereto whether used for residential or commercial purposes. Items excluded from definition of assets are contained in sub-clause (5) of clause (i) of section 2(ea) and sub-clause (5) says that assets does not include any property in the nature of commercial establishment or complexes. Thus, it is absolutely clear that by Parliament intendment which is expressed in wordings of section 2(ea) reproduced hereinbefore, commercial establishment or complexes are different from building used for residential or commercial purposes. It is settled rule of interpretation that harmonious interpretation is to be given in interrupting words/clauses in an enactment. If the interpretation canvassed by the appellant as mentioned above is to be accepted it will make section 2(ea)(i) inoperative because every building or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess or profession carried on by him'. Thus, it is clear that any house which is used for commercial purposes by an assessee other than the purpose of his own business or profession is an asset within the meaning of section 2(ea) of the Wealth-tax Act, 1957. In view of the foregoing discussion and taking into account the provisions of law, it is held that office at 1002, 2nd Floor, New Budhwar Peth, Pune, office at Shankar Parvati Chamber, Dhole Patil Road, Pune and basement at Shankar Parvati Chamber, Dhole Patil Road, Pune are assets within the meaning of section 2(ea) of Wealth-tax Act and correctly taxed by the Assessing Officer. Thus, ground No. 1 has no merit and it fails. 9. Still aggrieved, the assessees have preferred these appeals before us. 10. The ld. counsel for the assessee has submitted that the properties in question are not liable to be included within the definition of assets as defined under section 2(ea) of the Wealth-tax Act, 1957, inasmuch as they are covered by exception under sub-clause (5) of clause (i) of sub-section (ea) of section 2 of the Wealth-tax Act as these are the properties in the nature of commercial establishments or complexes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s commercial property in the local municipal records and municipal taxes have accordingly been paid from year to year. Supporting his case, the ld. counsel for the assessee has furnished number of documents, which are listed as below: 1. Purchase deed in respect of property at 1002, 2nd Floor, Budhwar Peth. 2. Copy of lease agreement in respect of Budhwar Peth property. 3. Copy of electricity bill in respect of Budhwar Peth property wherein it is clearly mentioned as commercial. 4. Copy of purchase deed in respect of office at 24, East Street, Yogesh House. 5. Copy of lease agreement in respect of Yogesh House property. 6. Copy of municipal tax receipt in respect of Yogesh House property. 7. Copy of purchase of deed in respect of office at Shankar Parvati Chamber, Plot No. 198. 8. Copy of lease agreement in respect of office at Shankar Parvati Chamber. 9. Copy of municipal tax receipt in respect of office at Shankar Parvati Chamber. 10. Copy of purchase deed in respect of office at ground floor, Shankar Parvati Chamber. 11. Copy of lease agreement in respect of office at ground floor, Shankar Parvati Chamber. 12. Copy of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-time employment, having a gross annual salary of less than two lakh rupees; (2) any house for residential purposes which forms part of stock-in-trade. (ii) ....... 14. The aforesaid clause (i) of sub-section (ea) of section 2 of the Wealth-tax Act was substituted by the following clause (i) by the Finance (No. 2) Act of 1996 with effect from 1-4-1997: (i) any building or land appurtenant thereto (hereinafter referred to as 'house'), whether used for residential or commercial purposes or for the purpose of maintaining a guest-house or otherwise including a farmhouse situated within twenty-five kilometers from local limits of any municipality (whether known as municipality, municipal corporation or by any other name) or a cantonment board, but does not include- (1) a house meant exclusively for residential purposes and which is allotted by a company to an employee or an officer or director who is in whole time employment, having a gross annual salary of less than two lakh rupees; (2) any house for residential or commercial purposes which forms part of stock-in-trade; (3) any house which the assessee may occupy for the purposes of any busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of wealth- tax. Vide this clause, it was proposed to exclude let-out residential properties from the definition of asset in case the property has been let out for a period of at least 300 days in a year. [Sub-clause (4) to clause (i) of sub-section (ea) of section 2 of the Wealth-tax Act]. It was also proposed to exclude any property in the nature of commercial establishment or complex from the definition of asset and these amendments should take effect from the 1st day of April, 1999 and would accordingly apply in relation to the assessment year 1999-2000 and subsequent years. In the Memorandum explaining the provisions in the Finance (No. 2) Bill, 1998, under the head Incentives proposed under the Wealth-tax Act , it is clarified that wealth-tax is not levied on productive assets. In view of this logic, it is proposed that wealth tax would also not be levied on such residential properties that have been let out for a period of a minimum of three hundred days in a year, and, it is also proposed to exempt commercial establishments and complexes from the ambit of Wealth-tax Act. It is, thus, clear that the Legislature has adopted a logic that wealth-tax is not levied on producti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (1) to (5) must not be read as alien to the main provision. In this view of the matter, we, therefore, do not find any conflict between the main enactment of clause (i) and the exceptions provided in sub-clauses (1) to (5) thereto. In the light of the main enactment provided in clause (i) and the exception provided thereto by way of excluding the properties or the houses enumerated in the sub-clauses (1) to (5) from the main enactment, the intention of the Legislature becomes clear that the Legislature did not intend to bring all buildings or land appurtenant thereto, whether used for residential or commercial purposes within the ambit of assets chargeable to tax under the Wealth-tax Act. Thus, the question of rendering the clause (i) being redundant does not arise. 18. On the reading of the aforesaid definition of 'assets' given under clause (i) of sub-section (ea) of section 2 as it stood from time to time, it is clear that sub-clause (3) below clause (i) of subsection (ea) of section 2 has been inserted by the Finance (No. 2) Act, 1996 with effect from 1-4-1997, and sub-clauses (4) and (5) were subsequently inserted by the Finance (No. 2) Act, 1998 with effect fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im. Thus, any house being not occupied by the assessee for the purpose of any business or profession carried on by him would not be covered by this sub-clause (3) even though the same may be used for commercial purposes by any person other than the assessee. 19. On the other hand, sub-clause (5) covers any property in the nature of commercial establishments or complexes. In order to cover a case under sub-clause (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-clause (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. 20. Sub-clause (5) below clause (i) of sub-section (ea) of section 2 of the Wealth-tax Act reads as under: (5) any property in the nature of commercial establishments or complexes; On its plain reading, it appears that any property in the nature of commercial establishments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse that the property must be in the nature of commercial property and the same must also be used for the purpose of trade or business and nothing else. In this sense of the term, we may, therefore, say that if any property though used for commercial purposes, but is not in the nature of commercial property, the same would not fall within the term 'commercial establishment' or complex used in sub-clause (5) below to clause (i) of subsection (ea) of section 2 of the Wealth-tax Act. Having regard to the object and purpose of the said clause (i) with exception thereto, any building though used for commercial purposes, but is not in the nature of commercial property or establishments, shall not be covered by expression any property in the nature of commercial establishment or complexes as used in sub-clause (5) below to clause (i) of sub-section (ea) of section 2 of the Act. For the purpose of the aforesaid clause, the property must be of commercial nature implying thereby that the very nature of the property must be commercial and at the same time it must be used in a business or trade and nothing else. 21. However, from the reading of the main provision contained in sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its very nature is also in the nature of commercial establishment or complex. Under sub-clause (5), the Legislature has excluded only the property in the nature of commercial establishment or complex from the definition of asset for the purpose of Wealth-tax Act and not all the properties which are used for commercial purposes. For the purpose of sub-clause (5), both the criterias of the nature and use of the property being of commercial must be fulfilled. 22. We may, therefore, summarize the proposition with regard to the building used for commercial purposes as under: (1) That any building or land appurtenant thereto used for commercial purposes shall not be excluded from the asset as defined under sub-section (ea) of section 2 of the Wealth-tax Act, unless (i) any house is occupied by the assessee for the purpose of any business or profession carried on by him [sub-clause (3)], or (ii) the property by its very nature is in the nature of commercial establishment or commercial complex, being used in a business or trade carried on in the said premises [sub-clause (5)], or (iii) the house for commercial purposes which forms part of stock in trade [sub-clause (2)]. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 SCC 707, the Hon'ble Supreme Court held as follows at page 718: The word 'any' has the following meaning: some; one of many; an indefinite number. One is indiscriminately of whatever kind or quantity. Word 'any' has a diversity of meaning and may be employed to indicate 'all' or 'every' as well as 'some' or 'one' and its meaning in a given statute depends upon the context and the subject-matter of the statute. It is often synonymous with 'either', 'every' or 'all'. Its generality may be restricted by the context. The meaning of the word any may therefore, imply all , or one of many , some or one . 25. The Hon'ble Calcutta High Court in the case of CIT v. Arvind Investments Ltd. [1991] 192 ITR 365, while interpreting the word any used in Explanation to section 73 of the Act has observed that any is a word which excludes limitation or qualification. It connotes wide generality. Its use points to distributive construction. It was further observed that the word any should be given a meaning as wide as possible in the context. The words any ward of the Municipal Borough is un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence, the assessee excluded the value thereof from the computation of net wealth: (1) Office premises at 1002, 2nd Floor, New Budhwar Peth, Pune, (2) Office at 24, East Street, Yogesh House, Pune, (3) Office at Shankar Parvati Chamber, Dhole Patil Road, Pune, (4) Basement at Shankar Parvati Chamber, Dhole Patil Road, Pune. 30. Both these assessees have one-half share each in these properties. 31. With regard to the property at 1002, 2nd Floor, Budhwar Peth, Pune, we have perused the respective purchase deed, lease agreement, electricity bill. Details of the amount of rent received by the assessee in respect of this property has also been furnished by the assessee. This property was purchased by the assessee vide Agreement dated 3-9-1994 from the promoter of the building M/s. Venkateshwar Associates. The assessee has purchased part of the premises situated at 2nd Floor in the multi-storeyed building situated at 1002, New Budhwar Peth, Pune. In this agreement, it is mentioned that certain flat/shop/office or godown has been constructed by the promoter. The area purchased by the assessee is 625 sq. ft. along with the terrace. At the upper portion of page 6 of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises specified therein. The assessee-purchaser was in need of acquiring an office which has been accordingly purchased by this purchase agreement. The floor plan is also attached to the agreement, which indicates that the premises are in the nature of office premises. The assessee has let out these premises on rent on leave and licence basis to M/s. D.S.S. Mobile Communications Ltd., who is allowed to use the said premises for their business of radio paging services and related activities. The licensee is thus using the said premises for carrying on their business of radio paging services and related activities. This property is subjected to property tax by the Pune Cantonment Board. Tax has been levied treating the property as shop premises situated at Yogesh House, East Street. East Street at Pune is a commercial area. The property where the shop is situated is consisting of a basement, ground floor and two upper floors, i.e., a multi-storeyed building. The property has shops and offices therein. The property purchased and owned by the assessee is in the nature of office premises, which has been let out for the purpose of business carried on by the lessee. In the light of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shankar Parvati Apartment. The sale agreement, lease agreement, and the municipal tax receipt in respect of this property has also been perused by us. The purchase deed is in respect of one room each of upper ground floor being in the nature of office. The said property has been given on rent on leave and licence basis to M/s. Golden Touch Developments (P.) Ltd. From the leave and licence agreement, it is not clear as to whether the property was given for the purpose of carrying on business by establishing an office by M/ s. Golden Touch Developments (P.) Ltd. or for the purpose of residence of its any employee. No other documents are on record to verify as to whether this property in question was used in a business or trade carried on by the licensee. Therefore, this needs further verification as to whether the property was actually used for the purpose of any business or trade by the licensee at the relevant point of time. As to the nature of the property, there is no dispute that it is in the nature of commercial property being in the nature of office premises. But the second criteria as to whether the property is used for the purpose of business or not is not established from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
