TMI Blog2015 (2) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... exes or establishments" are qualified with an adjective 'commercial'. Establishment or complex, therefore, must be of a commercial in nature. The word 'commercial' means something which is used in or related to, a business or a trade. Commercial means relates to or engaged in or used for commerce or trade. The word 'establishment' means an organization, building, construction, shop, store, concern or corporation. Thus, commercial establishment means some kind of place or building or shop or store where business or trade is carried on. Further, 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 productive assets, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 10771 sft namely, the factory building, courtyard, electrical substation, labour quarters, office and godown etc. The uncovered area is about 9393 sft on which construction is not permissible. This fact is admitted by AO vide his remand report dated 12.02.2010 and further supported by assessment order for AY 2002-03 dated 24.12.2009. But the AO in these two years noted that the assessee being the owner of land and building valued at ₹ 1,54,03,300/- and ₹ 8,26,948/- respectively is a taxable asset in term of section 2(ea) of the Act. The assessee rented out this premises to M. S. Dalmia Co Ltd for a rent of ₹ 12 lakh per annum and this rent was assessed under the head Income from House Property . Before the AO it was claimed by assessee that its case is covered by provisions of section 2(ea)(i)(5) of the Act being the property in the nature of the commercial establishment or complex. But the AO has not agreed with the contention of the assessee and treated the value of freehold land at ₹ 1,54,03,300/- and value of house property at ₹ 1,27,27,088/- as taxable wealth. 4. Aggrieved, assessee preferred appeal before CIT(A), who deleted the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding activities, an exemption to certain specified properties like commercial complexes under the Wealth-tax Act was provided. (See para 100 of Finance Minister's speech reported at page 69 (St) of 231 ITR). In the Notes on Clauses on Finance Bill No. 2, 1998, it is stated that Clause 69 of the Finance Bill No. 2. 1998, seeks to amend Section 2 of the Wealthtax Act relating to definitions. Sub-clause (b) of Clause 69 seeks to amend Subsection (ea) of Section 2 of the Wealth-tax Act relating to the definition of assets for the purpose 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 Subsection (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 99-2000 and subsequent years. In the Memorandum explaining the provisions in the Finance No. 2 Bill, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) to (5) would be the part of the main provision. The properties or the houses of a nature specified in Sub-clauses (1) to (5) below to Clause (i) of Subsection (ea) of Section 2 are an exception to the main provision. The exception provided in Sub-clauses (1) to (5) must, therefore, be considered in relation to the main or principal enactment of Clause (i) of Sub-section (ea) of Section 2 of the Wealth-tax Act to which these Sub-clauses (1) to (5) stand as an exception. The properties or houses enumerated in these Sub-clauses (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 chargeab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed and made of inter-relating parts in contrast to a single commercial establishment. In the case of commercial establishment, it is not necessary that it should be composed of or made of interrelated parts. In the case of a property in the nature of commercial establishment, it is not necessary that it should be also in the nature of commercial complex. The Legislature has excluded both commercial establishment as well as commercial complexes from the definition of asset for the purpose of chargeability to tax under the Wealth-tax Act. Therefore, for the purpose of Sub-clause (5) of Clause (i) of Sub-section (ea), property must be of commercial complex or establishment in nature where business or trade are being carried on and the property must also be used for the purpose of any business or trade as well. A property cannot only by its very nature be classified as a commercial establishment or complex unless the same is also used in a business and nothing else. Hence, the word 'commercial establishment' or complex, as the case may be. appears to be used in the sense that the property must be in the nature of commercial property and the same must also be used for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be clear from reading together the main provisions contained in Clause (i) together with exceptions provided in Sub-clauses (3) and (5). Therefore, the CIT (A)'s observation that if the interpretation canvassed by the assessee is to be accepted it would make Section 2(ea)(i) inoperative because every building or part of building used for commercial purposes shall be claimed to be a part of commercial establishment or complex, is not correctly made out. Merely because any building or land appurtenant thereto is used for commercial purposes would not that by itself is sufficient To bring it within the ambit of commercial establishment or complex unless it is also established and proved that the said building by its very nature is in the nature of commercial establishment or complex. The correct meaning of Sub-clause (5) would thus be that any property which is merely used for commercial purposes would not by itself be sufficient enough to classify the same as commercial establishment or commercial complex, unless it is also proved and established that the property by its very nature is also in the nature of commercial establishment or complex. Under Sub-clause (5), the Legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of commercial establishment or complex and used in a business or trade carried thereon. 23. One of the reasons given by the AO in rejecting the assessee's claim of treating the properties in question as exempted, was that the provisions of Sub-clause (5) of Clause (i) of Sub-section (ea) of Section 2 are applicable only in the case of property as a single unit because the word used there is any property in the nature of commercial establishments or complexes , but in the case of the assessee there is no single unit, but there are four properties in four separate buildings. This approach taken by the AO, in our considered view, is not found to be on sound footing. In the main provisions as well as in the exception clauses, the legislature has used the words like any building , any house , ''any residential property , and any property . In other words, building or houses or residential property or property are qualified with the word any . 24. In the case of Shri. Balaganesan Metals v. M. N. Shanmugham Chetty the Hon'ble Supreme Court held as follows at page 718: The word 'any' has the following meaning : some : one of many: an indefinite numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin its ambit. Therefore, any house , or any property , or any building shall include all houses, or some of them or one of them, as the case may be. Therefore, merely because the assessee has 4 commercial establishments or complexes at 4 different places can that by itself be a basis to hold that the property in question does not come under the purview of any property in the nature of commercial establishment or complexes . If the assessee owns more than one property in the nature of commercial establishment or complexes, the exemption shall be available to all such properties and cannot be restricted to any one of them. 6. From the proposition discussed by coordinate bench Pune Tribunal in the case of Satvinder Singh, Supra, we have to examine the facts of present case. The facts are that the assessee in its Balance Sheet filed along with return of income declared land and building at 160, B. L. Shah Road, Kolkata-700 053i.e. land and building separately. The total area of land consists of 20164 sft out of which covered area is 10771 sft namely, the factory building, courtyard, electrical substation, labour quarters, office and godown etc. The uncovered area is about 939 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, commercial establishment means some kind of place or building or shop or store where business or trade is carried on. The word complex means composite, compounded, multiple, manifold, multi-complex or something composed of or made of many interrelated parts, as for example, a multi-purpose building. Thus, the word 'commercial complex' means the commercial multi-purpose building composed and made of inter-relating parts in contrast to a single commercial establishment. In the case of commercial establishment, it is not necessary that it should be composed of or made of interrelated parts. The Legislature has excluded both commercial establishment as well as commercial complexes from the definition of asset for the purpose of chargeability to tax under the Act. 8. Further, 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, an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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