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2015 (5) TMI 321 - SUPREME COURT

2015 (5) TMI 321 - SUPREME COURT - TMI - Scope and ambit of section 40(3)(vi) of the Finance Act, 1983 - Whether the Hospital property would be subjected to wealth tax under the Wealth Tax Act, 1957 - the contention of the appellant is that the Hospital building should be treated as “office” which is used for the purposes of its business. - Held that:- For the exclusion the 'hospital' must be one held by an industrial unit for the welfare of its employees. Thus the intention of the legis .....

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APPEAL NOS. 8113-8116 OF 2004 - Dated:- 27-4-2015 - A.K. Sikri And Rohinton Fali Nariman JJ. For the Appellant : Mr. Yashraj Singh Deora, Adv., Mr. K. Rajeev, Adv., Mr. S. Rajjan, Adv., For the Respondent : Mr. Kavin Gulati, Sr. Adv., Mr. Arijit Prasad, Adv., Ms. Anil Katiyar, Adv., Mr. B. V. Balaram Das, Adv. ORDER The appellant company carries on the business of running a Hospital at Thiruvananthapuram. The issue arose as to whether the said Hospital property would be subjected to wealth tax u .....

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to the wealth tax inasmuch as under sub-Section (3) of Section 40, the nomenclature of those assets are mentioned which are to be included for the purposes of assessing the wealth tax and building and land appurtenant thereto is specifically stipulated therein. The appellant challenged the order by filing appeal before the Commissioner of Income Tax (Appeals) which was dismissed. In further appeal to the Income Tax Appellate Tribunal (hereinafter referred to as 'ITAT'), the appellant suc .....

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company in which the public are substantially interested, at the rate of 2 per cent of such net wealth. Thus, excluding those companies in which public has a substantial interest and share holding, assets and wealth of every company is excisable to wealth tax under the aforesaid provision. Sub-section (2) of Section 40 deals with the net wealth of a company on which the wealth tax is to be levied. The assets which are referred to in sub-section (2) are specifically stipulated in sub-section (3). .....

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thereto, other than building or part thereof used by the assessee as factory, godown warehouse, cinema house, hotel or office for the purposes of its business or as a hospital, creche, school, canteen, library, recreational centre, shelter, rest-room or lunch room mainly used for the welfare of its employees or used as residential accommodation, except as provided in clauses (vi-a) and (vi-b), and the land appurtenant to such building or part; (vi-a) any building used as residential accommodati .....

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have the meaning assigned to it in Explanation 1 to Section 13 of the Income-tax Act. This provision makes it clear that insofar as factory, godown warehouse and hotel are concerned, they are specifically excluded. Likewise residential accommodation for the employees or the accommodation which is run as hospital, creche, school, canteen, library, recreational centre, shelter, rest-room or lunch room mainly for the welfare of its employees and land appurtenant to such building or part thereto is .....

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of imagination can be treated as office . This aspect is dealt with by the High Court in detail in para 17 and 18 of the impugned judgment that reads as under: 17. We have already noted clause (vi) excludes building or part thereof used by the assessee as factory, godown, warehouse, hotel, cinema house or office for the purposes of its business and also buildings which are used for residential accommodation for its employees or as a hospital, creche, school, canteen, library, recreational centr .....

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exercise of separately specifying the buildings with reference to the nature of its user used by an assessee which is a closely held company for the purposes of exclusion. It is also relevant to note that clause (vi) apart from factory, godown, warehouse also refers to hotel and cinema theatre. If all buildings other than factory, godown, warehouse will fall within the expressions office for the purposes of its business there was no need at all for the legislature to classify the buildings for .....

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