TMI Blog2015 (4) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... as stated above, the assessee in this case does not fall within any of the exceptions provided under Section 40 (3) (vi) for availing the benefit. Such being the case, the building as such, constructed on a leasehold property, would be termed as an asset in terms of Section 40 (3) and, therefore, the net wealth of the company has to be determined in terms of Section 40 (2) of the Act for the purpose of levy of wealth tax under Section 40 (1). Assessee/appellant herein has leased out the property to the lessee for running banking business, which is not the business activity of the assessee/appellant. Therefore, as held by the Full Bench, assessee/appellant does not fall within the exclusionary clause mentioned in section 40(3)(vi) of the Finance Act, 1983, and, thereby, the assessee is liable to be taxed on the value of the tenanted portion of the building under Section 40 of the Finance Act, 1983. The abovesaid Full Bench decision is squarely applicable to the facts of the present case. Accordingly, following the Full Bench decision in Fagun's case (2006 (9) TMI 118 - MADRAS High Court), the 1st substantial question of law is answered against the assessee/appellant and in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Bank of India in terms of sub-lease agreement? 2. The facts, in a nutshell, are as hereunder :- The assessee entered into a lease agreement for a period of 99 years with M/s.Institute of Public Enterprises Public Administration and in the said land, assessee constructed a building and sub-leased the said building to Central Bank of India and received a certain amount as advance rent. The assessee did not show the building, that was let out to Central Bank of India, in the taxable wealth. Before the Assessing Officer, the assessee, however, claimed that the lease holding right in the land and building is not liable for wealth tax assessment. However, the said stand of the assessee was negatived by the Assessing Officer and, accordingly, the assessee was assessed to wealth tax. Aggrieved against such assessment, the assessee challenged the same before the CIT (Appeals), who held in favour of the assessee, against which the Department preferred appeal to the Tribunal. 3. The Tribunal, however, reversed the finding of the CIT (Appeals) and held in favour of the Department holding that 99 years lease is equal to ownership of the land. The Tribunal further held that lease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealth of a company shall be the amount by which the aggregate value of all the assets referred to in sub-section (3), wherever located, belonging to the company on the valuation date is in excess of the aggregate value of all the debts owed by the company on the valuation date which are secured on, or which have been incurred in relation to, the said assets : Provided that where any debt secured on any assets belonging to the assessee is incurred for, or ensure to, the benefit of any other person, or is not represented by any asset belonging to the assessee, the value of such debt shall not be taken into account in computing the net wealth of the assessee. (3) The assets referred to in sub-section (2) shall be the following, namely : (i) gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals ; (ii) precious or semi-precious stones whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel ; (iii) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Section 40 (1) read with Sections 40 (2) and (3) of the Act, the building constructed by the appellant would fall within the definition of specified asset for the purpose of determining the net wealth of the assessee liable to wealth tax. It is of no avail on the part of the assessee to plead that a commercial activity conducted in the premises would fall outside the purview of wealth tax, because, as stated above, the assessee in this case does not fall within any of the exceptions provided under Section 40 (3) (vi) for availing the benefit. Such being the case, the building as such, constructed on a leasehold property, would be termed as an asset in terms of Section 40 (3) and, therefore, the net wealth of the company has to be determined in terms of Section 40 (2) of the Act for the purpose of levy of wealth tax under Section 40 (1). 9. The above view of this Court is further fortified by the Full Bench decision of this Court in Commissioner of Wealth Tax Vs Fagun Co. P. Ltd. (2006 (286) ITR (Mad) (FB)), wherein on a reference, the Full Bench, answered the same as under :- 15. Unless and until the assets are used by the assessee as factory, godown, warehouse, hotel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be used only for limited purposes and cannot be used to construe the provisions of the statute. When the words in the statute are clear, it is not open to the courts to fall back upon the Statement of Objects and Reasons and to construe the provisions of the Act in the light of the Statement of Objects and Reasons. The Supreme Court judgment reported in State of Haryana v. Chanan Mal, AIR 1976 SC 1654, held that the Statement of Objects and Reasons cannot control the plain and obvious meaning which the sections, obviously convey ; it cannot be referred to as an aid to interpretation when the language of the operative provisions of the Act is clear and unambiguous. The Supreme Court judgment reported in P. V. Narasimha Rao v. State (CBI/SPE) AIR 1998 SC 2120, held that the speech of the Minister should not be looked into, except for the limited purpose of ascertaining the mischief which the Act seeks to remedy. Normally, the courts will not rely on the statement of the minister or explanatory notes on the clauses of a Bill for construing the provision except in cases where the language is vague, capable of different interpretations. When the statute is ambiguous, uncertain, clou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s court judgment reported in CWT v. Asoka Betelnut Co. P. Ltd. [2003] 260 ITR 573, wherein it was held that unless the business assets fall within the exclusionary clause of section 40(3)(vi) of the Finance Act, 1983, the business assets would be liable to be taxed under the Wealth-tax Act, 1957. In that case, there was a claim that the building owned by it was not eligible to wealth-tax under section 40 of the Finance Act, 1983. So, the main argument advanced by the assessee was that the shopping complex was a commercial asset and the assessee was exploiting the commercial asset by letting it out. Hence, the property used should be considered to be used in the assessee s business and therefore it was not liable for levy under the wealth-tax. The court rejected the contention and held that section 40 of the Finance Act, 1983 covers not only unproductive assets like gold, silver, platinum, stones, ornaments, utensils but also other properties like land and the building appurtenant thereto and motor cars. Hence, the commercial complex owned by the assessee, namely, building with the land appurtenant thereto, fell within clause (vi) of sub-section (3) of section 40 of the Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel appearing for the assessee relied on the Bombay High Court judgment reported in CWT v. Cema P. Ltd. [2001] 248 ITR 629, wherein it was held as follows: (page 629) : The Tribunal, on facts, came to the conclusion that the abovementioned office premises was a business asset not liable to wealth tax. That, merely because the said office premises have been leased out for five years, did not change the commercial character of the said asset. Apart from the order of the Tribunal which is passed, on facts, we ourselves examined the returns filed by the assessee right from the assessment year 1985-86 which clearly indicate that even under the Income-tax Act, the assessee has been given the benefit of depreciation and the income received by the assessee has been treated as income from business. Taking into account the above facts and circumstances of the case, we are of the view that a pure finding of fact has been recorded by the Tribunal. Hence, no interference is called for. Appeal dismissed. 18. With great respect, we are unable to agree with the view of the Bombay High Court judgment cited supra. They have not considered the scope of section 40 of the Finance Act, 1983 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment considered the scope of section 32A of the Incometax Act and held that the assessee is entitled to the investment allowance on plant and machinery let out to the third parties. Further it was held that the let out plant and machinery, were used in the business of leasing. Hence, the apex court granted investment allowance under section 32A of the Income-tax Act. In the present case, the articles of association indicate the main object, which is extracted hereunder : 2. To acquire by purchase, lease, exchange or otherwise farms, lands, buildings and hereditaments of any tenure of description and any estate or interest therein, and any rights over or connected with lands so situated and to turn the same to account as many seem expedient and in particular by preparing building sites and by constructing, reconstructing, altering, improving, decorating, furnishing and maintaining offices, flats, houses, hotels, restaurants, shops, factories, warehouses, wharves buildings works and conveniences of all kinds and by consolidating or connecting or sub-dividing properties and by leasing and disposing of the same. 22. From the object, it is clear that the assessee is carrying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The ratio of the Supreme Court is, therefore, inapplicable to the present case. 23. In the Wealth-tax Act, in computing the net wealth of the assessee, all commercial assets as per the provision of section 40 of the Finance Act are taxable and only particular assets as specified in the exclusionary clause alone are exempt from taxation. If the leasing companies let out the factory, warehouse or godown, the same is exempt from taxation. The Supreme Court judgment in the case of CIT v. Shaan Finance P. Ltd. [1998] 231 ITR 308, held that the assessee is entitled to investment allowance under section 32A of the Income-tax Act on the ground that the let out plant and machinery were used for the purpose of the leasing business and the income derived from leasing out, was assessed under the head Income from business . As the conditions enumerated in section 32A of the Income-tax Act were satisfied, the Supreme Court granted investment allowance. Section 32A of the Income-tax Act reads as follows : 32A.(1) In respect of a ship or an aircraft or machinery or plant specified in sub-section (2), which is owned by the assessee and is wholly used for the purposes of the business c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. v. CWT [2003] 260 ITR 164, held that, as per section 40(3)(vi) of the Finance Act, there is an additional requirement that the building should be used by the assessee as godown or warehouse for the purpose of its business. We are of the view that the let out assets are used by the assessee in its leasing business. If the leased out assets such as, godown, warehouse, hospital or other assets, come within the specified assets in section 40(3)(vi) of the Finance Act, certainly the assessee is entitled to the exemption, because the same is used in leasing business. The view of the Division Bench judgment that the leased assets are not used for the purposes of business, is contrary to the Supreme Court judgment cited supra. Hence, we are unable to agree with the Division Bench judgments reported in K. N. Chari Rubber and Plastics P. Ltd. v. CWT [2003] 260 ITR 164 (Mad) and CWT v. Indian Warehousing Industries Ltd. [2004] 269 ITR 203 (Mad). In the present case, the let out portions are not coming in any of the specified assets. Hence, the earlier judgment reported in CWT v. Fagun Estates P. Ltd. [2005] 272 ITR 472 (Mad) is correctly decided. The remaining judgments relied on by learne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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