Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Impact Metals Ltd. Versus Dy. Commissioner of Wealth Tax, Circle – 2 (1) , Hyderabad

Inclusion of rented premises into wealth tax assessment - revenue yielding asset - power of revision u/s 25 of the CIT - Held that:- section 2(ea)(i) nowhere requires that a commercial establishment or a complex could not be established in a house property but only provides that any property in the nature of commercial establishment or complex shall be excluded from deemed asset as defined in clause 1 of section 2(ea). Further, it nowhere provides that only commercial establishment or complex is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as extracted above. Therefore, it can be safely concluded that the AO formed an opinion in not bringing the property to tax and the same cannot be substituted by the CIT in the proceedings u/s 25(2) of the Act - Decided in favor of assessee. - WTA Nos. 2 & 3 /Hyd/2015 - Dated:- 22-1-2016 - Smt. P. Madhavi Devi, Judicial Member And Shri B. Ramakotaiah, Accountant Member For the Petitioner : Shri Mohd. Afzal For the Respondent : Smt. Mythili Rani ORDER Per B. Ramakotaiah, A. M. These two appeals a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the company, which has taken complete attention of the Executive Director, who could not prefer the appeal at the relevant point of time. It was explained that assessee company s turnover has come down from above 20 crores to ₹ 2.7 crores and due 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 Pancha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ings 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 stated above, we condone the delay and admit th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

CIT-II, issued notices u/s 25 of the WT Act assuming that the AO has omitted to consider the value of the property leased to M/s BHEL Gas Turbine Services (P) Ltd. for the purpose of WT and initiated proceedings u/s 25 considering that the orders of the AO as erroneous and prejudicial to the interests of revenue. 5. Consequent to the show cause notice, it was submitted by the assessee that the property which is leased to M/s BHEL Gas Turbine Services (P) Ltd. is commercial establishment and not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

AO and directed to consider the value of the building/property for the purpose of WT. His finding in para 5 of his order is as under: 5. The explanation filed by the AR of the assessee is examined and the explanation is not accepted. The argument of the AR that the lease property is a commercial establishment which is not in the purview of the asset is not correct. During the year, the assessee leased out the property to another company on lease basis and did not use for his business purpose. In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 provi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it was submitted that the AO has issued a show cause letter dated 29/05/12 specifically seeking the details of building leased to M/s BHEL Gas Turbine Services (P) Ltd. and the amount offered to WT u/s 2(ea). The assessee vide reply letters dated 25/03/13 filed respectively for both the years, has explained as under: In respect of property in survey No.587[part] and 588[part] admeasuring Acres 304 Guntas toqether with structures standing thereon, situated at Dundigal (Vi), Kuthbullapur (M), R.R .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fittings. The income was admitted as business income for the all assessment years and accepted. Therefore, this property cannot be a asset as defined in section 2[ea] of the VVT Act. At the most this is a commercial establishment. Therefore, not liable for WT Act. It was submitted that after the explanation was given, the AO has accepted the same and did not make any addition, which shows that he has applied his mind, therefore, the CIT is prevented by taking a different opinion under the provis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ubmit that CIT cannot substitute his opinion on an issue in the proceedings u/s 25 of the Act. Since the provisions of section 25 WT Act are in paripassu to the provisions of section 263 of IT Act, therefore, these principles will equally apply to the facts of the case. The ld. counsel further on merits submitted that the property is commercial property and incomes of which were offered and accepted as business and is revenue yielding asset. Consequently, the CIT cannot direct levy of wealth tax .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ade from time to time therein. The definition of assets in relation to assessment year commencing from the 1st day of April, 1993 or any subsequent assessment year before the same was substituted by Finance (No. 2) Act, 1996 w.e.f. 1st April, 1997, stood 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 guest-house and any residential house (including a farmhouse situated within twenty-fi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oses which forms part of stock-in-trade. (ii).............." 14. The aforesaid cl. (i) of sub-s. (ea) of s. 2 of the WT Act was substituted by the following cl. (i) by the Finance (No. 2) Act of 1996 with effect from 1st April, 1997 : "(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 kilometer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssee may occupy for the 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 purposes of any business or profession carried on by him; (4) any residential property that has been let out for a minimum period of three hundred days in the previous year; (5) any property in the nature of commercial establishments or complexes." 16. The exception provided in sub .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e WT Act was provided [see para 100 of Finance Minister s Speech reported at (1998) 147 CTR (St) 28 : (1998) 231 ITR (St) 69]. In the Notes on Clauses on Finance Bill No. 2, 1998, it is stated that cl. 69 of the Finance Bill No. 2, 1998, seeks to amend s. 2 of the WT Act relating to definitions. Sub-cl. (b) of cl. (69) seeks to amend sub-s. (ea) of s. 2 of the WT Act relating to the definition of assets for the purpose of wealth-tax. Vide this clause, it was proposed to exclude let out residenti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m explaining the provisions in the Finance No. 2 Bill, 1998 under the head "Incentives proposed under the WT Act", it is clarified that wealth-tax is not levied on productive assets. In view of this logic, it is proposed that wealth-tax would also not be levied on such residential properties that have been let out for a period of a minimum of three hundred days in a year, and, it is also proposed to exempt commercial establishments and complexes from the ambit of WT Act. It is, thus, c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f 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 prov .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ithin the definition of "asset" as defined under cl. (i) of sub-s. (ea) of s. 2 of the WT Act if any one of them is found to be covered by cls. (1) to (5) below s. 2(ea)(i) of the Act. Sub-cls. (1) to (5) qualify the generality of the main enactment by providing an exception and taking out from the main provision a portion which but for the exception provided in sub-cls. (1) to (5) would be the part of the main provision. The properties or the houses of a nature specified in sub-cls. ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

between the main enactment of cl. (i) and the exceptions provided in sub-cls. (1) to (5) thereto. In the light of the main enactment provided in cl. (i) and the exception provided thereto by way of excluding the properties or the houses enumerated in the sub-cls. (1) to (5) from the main enactment, the intention of the legislature becomes clear that the legislature did not intend to bring all buildings or land appurtenant thereto whether used for residential or commercial purposes within the amb .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1st April, 1999. The assessment years involved in these appeals are asst. yrs. 1999-2000 to 2002-03, and, as such, we are concerned with the definition of assets as substituted by Finance (No. 2) Act, 1998 w.e.f. 1st April, 1999. In the light 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 inser .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t 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 carried on by him only and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

this sub-clause. In order to bring the case to be covered by this item, the only requirement is to prove that the house was occupied by the assessee for the purpose of any business or profession carried on by him. The nature of the house is not material. What is material is that the house must be occupied by the assessee for the purpose of any business or profession carried on by him. Thus, any house being not occupied by the assessee for the purpose of any business or profession carried on by h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ase covered by sub-cl. (3). Here, the nature and purpose of use of the property is material irrespective of the fact whether it is used or occupied either by the assessee himself or anybody else for the purpose of any business or profession carried on by them, as the case may be. 20. Sub-cl. (5) below cl. (i) of sub-s. (ea) of s. 2 of the WT Act reads as under : Impact Metals Ltd. "(5) any property in the nature of commercial establishments or complexes;" On its plain reading, it appea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ry that it should be composed of or made of interrelated parts. In the case of a property in the nature of commercial establishment, it is not necessary that it should be also in the nature of commercial complex. The legislature has excluded both commercial establishment as well as commercial complexes from the definition of "asset" for the purpose of chargeability to tax under the WT Act. Therefore, for the purpose of sub-cl. (5) of cl. (i) of sub-s. (ea), property must be of commerci .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e used for the purpose of trade or business and nothing else. In this sense of the term, we may, therefore, say that if any property though used for commercial purposes, but is not in the nature of commercial property, the same would not fall within the term commercial establishment or complex used in sub-cl. (5) below cl. (i) of sub-s. (ea) of s. 2 of the WT Act. Having regard to the object and purpose of the said cl. (i) with exception thereto, any building though used for commercial purposes, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

from the reading of the main provision contained in sub-cl. (i) of sub-s. (ea) of s. 2, which is appended above, it is clear that any building or land appurtenant thereto used for commercial purposes also comes within the definition of asset, subject to the items excluded, vide sub-cls. (1) to (5) thereto. In the main principal portion of cl. (i), the word used is "any building or land appurtenant thereto whether used for residential or commercial purpose", but it is always subject to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ss 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or complex unless it is also established and proved that the said building by its very nature is in the nature of commercial establishment or complex. The correct meaning of sub-cl. (5) would thus be that any property which is merely used for commercial purposes would not by itself be sufficient enough to classify the same as commercial establishment or commercial complex unless it is also proved and established that the property by its very nature is also in the nature of commercial establishm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es as under : (1) That any building or land appurtenant thereto used for commercial purposes shall not be excluded from the "asset" as defined under sub-s. (ea) of s. 2 of the WT Act, unless (i) any house is occupied by the assessee for the purpose of any business or profession carried on by him [sub-cl. (3)], or (ii) the property by its very nature is in the nature of commercial establishment or commercial complex, being used in a business or trade carried on in the said premises [sub .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

criteria of its being in the nature of commercial establishment or complex and also used in a business or trade carried thereon shall be covered by sub-cl. (5) below s. 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 th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f 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 that a commercial establishment or a complex could not be established in a house property but only provides that any property in the natur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

Article: 20 Things You must know about E Way Bills in GST Law

Article: ‘DUTY DRAWBACK’ CANNOT BE EQUATED WITH ‘REBATE OF DUTY’

Forum: GST on Notional rent

Highlight: Notification regarding GST rate for branded cereal, pulses and flour

News: Notification regarding GST rate for branded cereal, pulses and flour

Highlight: Anti-dumping duty on import of bus/truck tyres from China

Highlight: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Non-payment of service tax - maintenance and repair charges - appellants had knowingly and deliberately shown the repair charges as job work charges to mislead about their taxability - demand confirmed.

Highlight: BAS - execution of the project of smart card for vehicle registration – implementing the SOC-VRC project - The fact that the Government has outsourced some part of the work and paid certain consideration for such outsourced work, does not make the activity subject to service tax.

Forum: Input tax credit

Forum: Cess paid instead of SGST

Forum: Excise duty credit on finished stock at additional place of business.

Circular: Amendments in Hand Book of Procedures 2015-20 –reg.

News: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Constitution of National Anti-profiteering Authority (NAA) under GST-reg. - Trade Notice

Highlight: Amendments in Hand Book of Procedures 2015-20 –reg. - Various amendments are made in Chapter-4 of Hand Book of Procedures 2015-2020.

Forum: GST rates on mobile recharge business

Circular: Constitution of National Anti-profiteering Authority (NAA) under GST-reg.

Forum: import purchase

Highlight: Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.

News: RBI Reference Rate for US $

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector – reg.

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version