9911796707
TMI Blog2012 (8) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... s is in the nature of commercial establishment or complex has not been proved by the appellant. 3. He failed to appreciate that: (a) The appellant had produced copy of purchase agreement which clearly shows that the said premise is in the nature of a commercial establishment / complex. (b) The said premise is not liable to wealth tax. 4. The appellant prays that the addition of Rs. 5,00,91,438 to the net wealth be deleted. 3. First ground is regarding validity of issuing notice u/s 17 of the W T Tax for reopening of the assessment. 3.1 The assessee did not file its return of wealth u/s 14(1) of the W T Act. However, during the assessment proceedings of the Income Tax Act u/s 143(3), it was noticed that the assessee had received rental income of Rs. 39,48,600/- by letting out of office premises. The said income was assessed by the Assessing Officer in the Income Tax Proceedings as income from house property and consequently notice u/s 17 of the W T Act was issued on 24.3.2010 after recording reasons. In response to notice the assessee filed its return of net wealth on 27.4.2010 declaring net wealth of Rs. 15,10,300/- . The assessment was completed u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been assessed as income from house property. After completion of the income tax assessment, the Assessing Officer issued notice u/s 17 of the W T Act on 24.3.2010. When there was no assessment and also the notice u/s 17 was issued within four years from the end of the relevant assessment year, then the case of the assessee does not fall under the first proviso to sec. 17(1) of W T Act. Where the case does not fall under the first proviso, the pre-requisite condition for exercising the power u/s 17 of the W T Act is the existence of reason to believe that there is an escapement of wealth from assessment. It is pertinent to note that the reopening of the assessment falls under Explanation to sec. 17(1A) of W T Act which creates deeming fiction. 5.1 It is only during the assessment proceedings u/s 143(3) of the Act the Assessing Officer made an enquiry and found that the assessee has let out the property in question and received rent which is assessable as income from house property. Even, the assessee itself has admitted the rental income as income from house property and has not challenged the order on this point. 5.2 The information and material gathered during the assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in the subsequent year where additional material has emerged before the Assessing Officer leading to the formation of a belief that the income chargeable to tax had escaped assessment. 5.4 It is settled proportion that it would open to the Assessing Officer to reopen the assessment based on the finding of fact made on the basis of fresh material gathered during the course of assessment proceedings for subsequent year or under different provisions of law as in the case in hand. It is well established position of law that the assessment can be reopened on the basis of information contain in different assessments of assessee. 6. In view of the above discussion and in the facts and circumstances of the case, we are of the considered opinion that the information and material found during the course of assessment proceedings u/s 143(3) of Income Tax Act whereby the rental income was assessed under the head 'income from house property' in respect to the property in question, constitute a tangible material for forming a belief by the Assessing Officer that the net wealth assessable to tax has escaped assessment. Accordingly, the reopening of the assessment by issuing notice us/ 17 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the order of the authorities below. 9. We have considered the rival contention as well as the relevant material on record. The mute question before us is whether the premises in question falls under the category of commercial establishments or complexes as stipulated under sec. 2(ea)(i)(5)of the WT Act. 9.1 We quote the exception (5) of sec. 2(ea)(i) as under: (5) Any property in the nature of commercial establishments or complexes; 9.2 A plain language of the above exception clearly expressed the intention of the legislature that any property in the nature of commercial establishments or complexes will not be included in the definition of assets for the purpose of W T Act. The term 'establishments' or 'complexes' are used in the provision are plural and therefore, suggest that the property which comprising more than one commercial establishment is excluded from the definition of assets. Even otherwise the term 'commercial establishments' or 'complexes' does not mean a mere building structure to be used for commercial purpose. 9.3 The term of commercial establishments or complexes as may be understood by a person of a ordinary prudent, refers to commercial establishmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 facts, it is, therefore, clear that the property in question is in the nature of a commercial establishment. This property is not merely used for commercial purposes, but also it is in the nature of a commercial building. Therefore, having regard to the nature of the property as well as its use the property can be classified as commercial establishment within the meaning of section 2(ea)(i)(5) of the Wealth-tax Act and as such, value thereof is not includible in the net wealth chargeable to tax under the Wealth-tax Act." 10.1 It is clear from the facts of the said case that the property in question was not a single office premis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of the property supported by any municipal tax paid has been furnished. The property has been let out to the said Institute. Thus, it is clear that the property was also not in use and occupation of the assessee for the purpose of any business carried on by the assessee. 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 Peth, Pune that it does not fall within the definition of "asset" defined under section 2(ea)(i) as it is excluded by sub-clause (5) thereto, is not justified." 11. It is clear from para 31 of the said decision that the premises being a promoters office No. 2 at 2nd Floor along with terrace was not found as commercial establishment or complex and therefore, it cannot be said that it is in the nature of commercial establishm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, i.e., in favour of the assessee and against the Revenue." 12.3 Applying the same analogy once the premises in question has been treated as non-business asset and not used for the purpose of business of the assessee in the income-tax proceedings, then the same cannot be treated differently in the proceedings under Wealth tax Act. 13. Our view has been supported by the order of the Tribunal in the case of Bernhard Schulte Shipping India (P.) Ltd v. ACWT [WT Appeal Nos. 63 & 64(Mum) of 2011 vide order dt. 30.12.2011] wherein the Tribunal has decided the similar issue in para 6 as under: "6. We have considered the rival submissions made by both the sides, perused the orders of the authorities below and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the assessee is engaged in the business of "Ship Management Services" as per the statement of facts filed before the Ld. CIT(A). Therefore, the assessee is not in the business of letting out properties. We find the Honbie Karnataka High Court in the case of Shankaranarayana Industries & Plantations (P) Ltd. (supra) after considering th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
