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TMI Blog2016 (1) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... e to financial difficulties there was pileup of salaries and electricity bills etc. The Recovery Officer of EPF Organization issued a show cause notice and in the month of March'15, the PF authorities visited assessee's premises and drawn a Panchanama and attached properties worth Rs. 75 lakhs for enforcement arrears. Further, the ICICI Bank, who has advanced loan to assessee also issued a public notice-cum-auction notice for sale of secured assets in the month of February'15. Even though the order was served on Executive Director, due to the financial difficulties and day-to-day management of running the establishment, the Executive Director missed preferring an appeal. However, the accountant of the company appeared for the proceedings of AY 2012- 13 and came to know about the order. Immediately steps were taken to file the appeal. It was submitted that the delay is not an intentional one and not with a contumacious conduct. 2.1 After considering the detailed submissions of the learned counsel for the assessee and objections raised by the ld. DR, we are of the opinion that the assessee has sufficient reasons why the appeal could not be filed in time. Considering the facts as sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . DCWT (ITAT, Cal.) 69 ITD 135 and CWT Vs. Indian Ware Housing India Ltd. (Mad.) 269 ITR 203, it is decided that the building leased out to M/s BHEL Gas Turbine Pvt. Ltd. is treated as wealth considered for the purpose of wealth tax. Further reference is also made to ITAT, Mumbai Bench - Bernhard Shulte Shipping India (P) Ltd. wherein it was clearly held that if the assessee is not in the business of letting out of properties, premises let out for business purposes are taxable under the Wealth Tax Act." 6. The ld. counsel for the assessee submitted that the case law relied on by the revenue are prior to 01/04/89 wherein the provisions of WT Act are entirely different. The definition of 'asset' under the WT Act has been substantially modified and this aspect was considered by the coordinate bench of ITAT, Pune in the case of Satvinder Singh Vs. DCWT, [2007] 109 ITD 241 (Pune). He also relied on the decision of the Hon'ble Gujarat High Court in the case of CIT Vs. Vasumati ben Chhaganlal Virani [2013] Tax Pub(DT) 2980 (Guj-HC). On the issue of whether the order of AO is erroneous and prejudicial to the interests of revenue, it was submitted that the AO has issued a show cause lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently, the CIT cannot direct levy of wealth tax on the building, both on facts as well as on law and as the action of CIT cannot be justified, requested for setting aside the order. 7. The ld. DR, however, relied on the orders of CIT to submit that assessee has not used the property for its own business, consequently, levy of wealth tax is warranted. 8. We have considered the issue and examined the rival contentions. As far as the facts of the properties are concerned, it is assessee's own property on which buildings were constructed as per the specifications of the lessee and leased out to M/s BHEL Gas Turbine Services Pvt. Ltd. for the purpose of running service centre. It is also a fact that assessee is offering the income as business income and the same is also accepted in all the years, except AY 2007-08. In that year also, the AO treated the same as 'income from house property', but, on appeal assessee's contentions were accepted and therefore there is no dispute on the fact that incomes were on this property is being offered under the head 'income from business' only. It is also a fact that the property is not a residential house, but, a commercial property. 9. Proper a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purposes of any business or profession carried on by him;" 15. The aforesaid cl. (i) substituted by the Finance (No. 2) Act, 1996 w.e.f. 1st April, 1997 has been further substituted by the Finance (No. 2) Act, 1998, w.e.f. 1st April, 1999, which reads as under : "(ea) 'assets', in relation to the assessment year commencing on the 1st day of April, 1993, or any subsequent assessment year, means- (i) 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 farmhouse situated within twenty-five kilometers from local limits of any municipality (whether known as municipality, municipal corporation or by any other name) or a Cantonment Board but does not include- (1) a house meant exclusively for residential purposes and which is allotted by a company to an employee or an officer or a director who is in whole- time employment, having a gross annual salary of less than five lakh rupees; (2) any house for residential or commercial purposes which forms part of stock-in-trade; (3) any house which the assessee may occupy for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... logic, it was proposed that wealth-tax would not be levied on such residential property that has been let out for a period of minimum 300 days in a year and to exempt commercial establishments and complexes from the ambit of wealth-tax. Therefore, while construing the meaning to sub-cls. (4) and (5) inserted by the Finance (No. 2) Act, 1998 w.e.f. 1st April, 1989, the intention of the legislature that wealth-tax is not to be levied on productive assets is to be kept in mind. 17. On reading of the main enacting provision of cl. (i) of sub-s. (ea) of s. 2, as substituted by the Finance (No. 2) Act, 1996 w.e.f. 1st April, 1997 and by the Finance Act, 1998 w.e.f. 1st April, 1999, it is clear that any building or land appurtenant thereto whether used for residential or commercial purposes falls within the meaning of "assets", however, subject to the exceptions provided thereunder. Some of the buildings or land appurtenant thereto whether used for residential or commercial purposes have been taken out from the main provision as envisaged under sub-cls. (1) to (5) of cl. (i) of sub-s. (ea) of s. 2 of the WT Act. In other words, sub-cls. (1) to (5) carve certain properties or houses out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight of the aforesaid definition of "assets" as it stood from time to time, any house which the assessee may occupy for the purposes of any business or profession carried on by him was not excluded from the purview of "asset" before the insertion of sub-cl. (3) by the Finance (No. 2) Act, 1996 w.e.f. 1st April, 1997. In other words, upto the asst. yr. 1996-97 any house which the assessee may occupy for the purpose of any business or profession carried on by him was treated to be a part of the asset. But, the same has now been excluded w.e.f. 1st April, 1997 vide sub-cl. (3) of cl. (i) of sub-s. (ea) providing thereby that any house which the assessee may occupy for the purpose of any business or profession carried on by him shall not be included within the definition of the "assets". It is further clear that only that house which the assessee may occupy for the purpose of any business or profession carried on by him is only excluded from the "asset" vide sub-cl. (3) below cl. (i) of sub-s. (ea) of s. 2 of the Act. Therefore, in order to claim benefit of this clause, the assessee has to prove that the house was being occupied by him for the purpose of any business or profession carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property should not be of any nature other than the nature of commercial establishments or complexes. In this sub-cl. (5), "complexes 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 relating to or engaged in or used for commerce. 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. 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 words 'commercial complex' mean 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. In the case of a property in the nature of commercial establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) thereto. Sub-cl. (3) covers only those houses, which are occupied by the assessee for the purpose of any business or profession carried on by the assessee. Sub-cl. (5) covers all those properties which are in the nature of commercial establishment or complex meaning thereby that the property must be in the nature of commercial establishment or complex which in turn indicates that the property must also be actually used for the purpose of any business or trade carried on in those commercial establishments or complexes. This would mean that any house, which is not by its very nature in the nature of commercial establishment or complex, but is occupied for the purpose of any business or profession carried on, not by the assessee but by somebody else, shall be included in the definition of "asset" as would be clear from reading together the main provisions contained in cl. (i) together with exceptions provided in sub-cls. (3) and (5). Therefore, the CIT(A)'s observation that if the interpretation canvassed by the assessee is to be accepted it would make s. 2(ea)(i) inoperative because every building or part of building used for commercial purposes shall be claimed to be a part of com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(ea)(i) of the Act. Furthermore, any house used for commercial purposes forming part of stock-in-trade also stand excluded from the purview of asset vide exception provided in sub-clause below s. 2(ea)(i) of the Act. In this sense, we may, therefore, state that merely because of the fact that any building or land appurtenant thereto is used for commercial purposes would not come within the ambit of sub-cls. (2), (3) and (5) unless for the purpose of sub-cl. (2), it forms part of stock-in-trade, for the purpose of sub-cl. (3) it is satisfied that the house was occupied by the assessee himself for the purpose of any business or profession carried on by him and for the purpose of sub-cl. (5) property itself was in the nature of commercial establishment or complex and used in a business or trade carried thereon." In view of the detailed analysis of the provisions as above, we are of the opinion that the commercial building leased out by the assessee gets exemption under sub-clause 5 of the provision to section 2(ea)(i). 10. Not only that the Hon'ble Gujarat High Court in the case of CIT Vs. Vasumati ben Chhaganlal Virani (supra) also held that "section 2(ea)(i) nowhere requires tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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