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2016 (1) TMI 443 - ITAT PUNE

2016 (1) TMI 443 - ITAT PUNE - TMI - Inclusion of aircraft in the wealth tax assessment - co-ownership of the aircraft - exception u/s.2(ea)(iv) of the Wealth Tax Act - Held that:- value of aircraft, which is used in the assessee’s business, cannot be included in taxable wealth and the exception provided u/s.2(ea)(iv) of the Wealth Tax Act is attracted.

Merely because the Revenue has not accepted the decision of the Tribunal and an appeal has been filed before the Hon’ble Bombay High .....

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T(A)-II, Pune relating to Assessment Year 2011-12. 2. Facts of the case, in brief, are that the assessee company is engaged in the business of production and sale of vaccines which are sold in India and also outside India. It co-owns aircraft which was used in the business of the company. In the Wealth Tax return, the assessee company had not included the aircraft in the taxable net wealth on the ground that the aircraft is used in assessee s business and therefore provisions of section 2(ea)(iv .....

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proposition that the aircraft used in the assessee s business is outside the purview of the taxable net wealth. 3. However, the AO did not accept the contention of the assessee on the ground that exception u/s.2(ea)(iv) of the Wealth Tax Act is attracted only if aircraft is used for commercial purposes, i.e. an asset used for hiring etc. Further, the decision of the Pune Bench of the Tribunal in the case of sister concern of the assessee has not been accepted by the Revenue and an appeal is pend .....

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evant observation of the CIT(A) from Para Nos. 10 to 13 of the order read as under : 10. I have carefully considered the facts and circumstances of the case as well as the reply of the appellant. The fact that the aircraft in question was being used in the assessee's business is not disputed. The appellant has claimed that depreciation has been allowed on the same aircraft by the AO in the I T assessment. The appellant has also mentioned that the Assessing Officer has not included the Aircra .....

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India) Ltd. is a sister concern of the appellant & the Aircraft in question is jointly owned by the appellant and El-O-Matic(India) Ltd. Hon'ble ITAT has given the following findings in the case of El-OMatic( India) Ltd. which is reproduced as under: "9. The argument set-up by the Revenue and which has been upheld by the Commissioner of Wealth-tax(Appeals) is to the effect that in the Income-tax assessment proceedings, a portion of the expenses on running of aircraft has been disall .....

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earned Counsel, the expression 'commercial purposes' in section 2(ea) does not require the assessee to prove that the same was exclusively used for commercial purposes. Quite clearly, substantively speaking, it is undeniable that the aircraft in question has been treated as a business asset, used in the assessee's business on which depreciation has been allowed and the same qualifies to have been used for commercial purposes within the meaning of section 2(ea)(iv) of the Act, and is .....

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the Assessee for the purposes connected with its business. When the Assessee uses the aircrafts in connection with its business as distinct from using it for personal purposes or non-business purposes, the use of the aircraft would be a use for commercial purposes and would be thus exempt from the purview of wealth tax. 10. When the directors or executives of a company use an aircraft owned by the company to travel to its various offices or to various places for meeting or business purposes conn .....

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practical necessity and help business grow, expand and generate profit. 11. The use of an aircraft for commercial purposes does not necessarily entail hiring to third parties, ferrying of passenger of passenger or leasing of the aircrafts for consideration. The intention of the legislature while creating the exception by using the expression "used by the Assessee for commercial purposes" was not to restrict the meaning of the words "commercial purposes" to running the same on .....

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that it is undisputed that the two aircrafts were used by the Assessee for its business. Since this is the undisputed factual position, the same would be exempt from wealth tax. 13. Learned counsel for the appellant has submitted that the decision of the tribunal in Garware Wall Ropes Ltd. (supra) has not been taken up in appeal in the revenue before the Bombay High Court and has been accepted. 14. We find no infirmity in the impugned order of the Income Tax Appellate Tribunal. The appeal being .....

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e decided in favour of the appellant. The Assessing Officer is directed to exclude the amount of ₹ 18,49,18,112/- from the taxable wealth of the appellant. 5. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : 1) On the facts and the circumstances of the case and in law, the Ld. CIT(A) was not justified in allowing exemption as provided in section 2 (ea)(iv) of the W. T. Act, 1957 ignoring the fact that the said exemption is available on .....

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was not justified in misinterpreting the words "Commercial Purpose" for the purpose of the Wealth Tax Act, 1957 where the intent of the Act was to include those aircrafts which were used to ferry passengers or freight as per regulations of the Directorate of Civil Aviation. 4) The order of the Ld. CIT(A) may be vacated and the Assessing Officer be restored. 5) The appellant craves leave to add, alter amend and modify any of the above grounds of appeal. 6. We have considered the rival a .....

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