9911796707
TMI Blog2015 (11) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... the AY 2005-06. On further perusal of the wealth tax records, the WTO noticed that the said Guest House flat was not included in the Wealth Tax returns for the various AYs in question. According to the WTO as per the definition of assets u/s.2(ae)(i) of the Act, any building or land appurtenant thereto used for the purpose of maintaining a guest house is covered in the definition of assets for the purpose of computation of wealth tax. In view of the above, proceedings for assessment of wealth that has escaped assessment were commenced against the Assessee for the AY 2000-01 to 2004-05 by issue of a notice u/s.17 of the Act. 3. The Assessee challenged the validity of initiation of reassessment proceedings u/s.17 of the Act on the ground that along with the original return of wealth filed u/s.14 of the Act, the Assessee had filed its Balance Sheet disclose complete details of assets owned and held by the Assessee which included the flat owned by the Assessee at Chennai. The wealth tax returns so filed were processed u/s.16(1) of the Act. The reopening of such assessments on the ground that the flat at Chennai was in the nature of guest house and therefore constituted an "Asset" und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accommodation as available exclusively for the purpose of its employees, the accommodation in question was not a "guest house". In view of the foregoing decisions and the facts as stated above, it is amply clear that the flat at Chennai was not in the nature of "guest house" as alleged by the Wealth-tax Officer. In light of definition given by the High Courts, the flat was a transit accommodation of the appellant for its employees and not a "guest house". Since the said flat does not qualify as guest house for the purposes the wealth tax; the addition of R.s.58,79,800/- made while assessing the net wealth deserves to be deleted in fully. The appellant further submits that the provisions of Section 2(ea)(i) of the Wealth-tax Act, 1957 as follows: "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 farm house situated within twenty-five kilometers from local limits of any municipality (whether known as Municipality, Municipal Corporation or or by any other name) or a Cantonment Board, but does not include _ (1) a house meant exclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for business purposes and therefore qualified for exemption u/s. 2(ea)(i)(3) of the WT Act, 1957. Attention in this regard is invited to the decision of the Delhi High Court in the case of CIT vs Modi Industries Ltd. (210 ITR 1) wherein the Court held that, if a house property is occupied by employees or directors, etc., of a company, for the promotion of business of the company and/or to enable them to discharge their functions efficiently and the letting out of property is subservient and incidental to the main business of the company, such an occupation amounts to the property being occupied and use by the company itself for the purposes of its business, even though no business is actually carried on in such premises and therefore notional annual value cannot be assessed. Relying on the above cited judicial precedents, the appellant submits that the Chennai flat was meant for exclusive use of its employees while on visit to the appellant's factory in Chennai and was occupied by the appellant's employees in the course and for the purposes of the appellant's business. In the aforesaid facts and circumstances the flat at Chennai squarely tell within the exception provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the Assessee who reiterated submissions as were made before the CWT(A). A copy of the judgment of the Hon'ble Gujarat High Court was also filed before us. The learned DR relied on the order of the CWT(A) and further placed reliance on the decision of the Hon'ble Calcutta High Court in the case of Kesoram Industries and cotton Vs. CIT 191 ITR 518 (Cal) wherein the Hon'ble Calcutta High Court took the view (vide para-13 of its judgment) took the view in the context of deduction u/s.37 of the Income Tax Act, 1961 (IT Act) took the view that transit bunglows are guest houses. 6.1. We have given a very careful consideration to the rival submissions. In the case of CIT Vs. Gujarat State Petroleum Corporation Tax appeal No.684 & 685 of 2010 order dated 16.8.2011, the question before the Hon'ble Gujarat High Court was as to whether the guest house of the Assessee at Hazira, Surat which was primarily maintained by the Assessee for the purpose of its business for use by its officers can be regarded as "Asset within the meaning of Sec.2(ea)(i) of the Act. The Hon'ble Gujarat High Court agreed with the view of the Tribunal that the same had to be regarded as falling within exception ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for its business purposes and recovery charges for the use of such guest house by officials of joint venture partner and professionals, who rendered services, was rightly regarded by the Learned Commissioner of Wealth Tax (Appeals) in the assessment year 2001-02 under the head "business". The guest house maintained at nearby site from where exploration and exploitation of oil resources were carried out by the assessee is maintained for the purpose of business. Therefore, its value is not includible in net wealth of the assessee for both the assessment years under clause (3) as well as clause (5) of section 2(ea)(i) of the Wealth Tax Act, 1957. The view taken by the Learned Commissioner of Wealth Tax (Appeals) in respect of guest-house is also upheld for both the assessment years." Having heard learned counsel for the Revenue and having perused orders on record, we find that the CIT(A) as well as the Tribunal have both concurrently come to the conclusion that the said two immovable properties were utilized by the assessee for the purpose of its own business. We may recall that the assessee, Government Owned Company, had pointed that the property at Udyog Bhavan was permi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any subsequent assessment year, no allowance shall be made in respect of depreciation of any building used as a guest house or depreciation of any asset in a guest house: Provided that the aggregate of the expenditure referred to in clause (i) and the amount of any depreciation referred to in clause (ii), shall, for the purposes of this sub-section, be reduced by the amount, if any, received from persons using the guest house: Provided further that nothing in this sub-section shall apply in relation to any guest house maintained as a holiday home if such guest house- (a) is maintained by an assessee who has throughout the previous year employed not less than one thousand whole time employees in a business or profession carried on by him; and (b) is intended for the exclusive use of such employees while on leave. Explanation : For the purposes of this sub-section,- (i) residential accommodation in the nature of a guest house shall include accommodation hired or reserved by the assessee in a hotel for a period exceeding one hundred and eighty-two days during the previous year; and (ii) the expenditure incurred on the maintenance of a guest house shall, in a case where ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
