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TMI Blog2016 (2) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... has been directed to add the value of the asset (in dispute) in the taxable wealth of the appellant is bad-in-law. 2. For that the assumption of jurisdiction u/s. 25(2) by the Ld. Commissioner of Wealth Tax proceeded on the basis of proposal made out by the AO and not on calling and examining the records of the appellant and this jurisdiction renders the proceedings drawn invalid. For that the appellant was not given any opportunity of being heard by the Ld. Commissioner of Wealth ax and as such the order is liable to be vacated. 4. For that, without prejudice, the submissions made by the appellant in writing ought to have been accepted by the Ld. Commissioner of Wealth Tax and proceedings drawn u/s 25(2) of the Wealth Tax Act, 1957 ought to have been revoked." 3. Briefly stated facts are that original wealth tax assessment for the relevant assessment year 2006-07 was completed u/s. 16(3)/17 of the Act on 19.12.201. Subsequently, the CWT(A)-XI, Kolkata on examination of records found that the assessment framed by AO is erroneous in so far as prejudicial in the interest of the revenue due to following reasons:- "It was found from the relevant assessment record that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Singh V Dy. CWT(2007)109 ITD 241(Pune), wherein the entire provision of section 2(ea) of the Act is discussed in para13 to 27 as under:- "16. The exception provided in Sub-clauses (4) and (5) below to Clause (i) of Sub-section(ea) of Section 2 has been inserted by the Finance (No. 2) Act with effect from 1.4.99. In the Budget Speech of Minister of Finance, the Hon'ble Finance Minister has stated that housing is an area which requires our utmost attention, and, therefore, he proposed several incentives to encourage house building activity. Amongst several incentives to encourage house building activities, an exemption to certain specified properties like commercial complexes under the Wealth-tax Act was provided. (See para 100 of Finance Minister's speech reported at page 69 (St) of 231 ITR). In the Notes on Clauses on Finance Bill No. 2, 1998, it is stated that Clause 69 of the Finance Bill No. 2. 1998, seeks to amend Section 2 of the Wealth-tax Act relating to definitions. Sub-clause (b) of Clause 69 seeks to amend Sub-section (ea) of Section 2 of the Wealth-tax Act relating to the definition of assets for the purpose of Wealth-tax. Vide this clause, it was proposed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or houses out of the main enacting provision. It is thus clear that all building or land appurtenant thereto, which are whether used for residential or commercial purposes, may not come within the definition of "asset" as defined under Clause (i) of Sub-section (ea) of Section 2 of the Wealth-tax Act if any one of them is found to be covered by Clauses (1) to (5) below to Section 2(ea)(i) of the Act. Sub-clauses (1) to (5) qualifies 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-clauses (1) to (5) would be the part of the main provision. The properties or the houses of a nature specified in Sub-clauses (1) to (5) below to Clause (i) of Sub-section (ea) of Section 2 are an exception to the main provision. The exception provided in Sub-clauses (1) to (5) must, therefore, be considered in relation to the main or principal enactment of Clause (i) of Sub-section (ea) of Section 2 of the Wealth-tax Act to which these Sub-clauses (1) to (5) stand as an exception. The properties or houses enumerated in these Sub-clauses (1) to (5) must not be read as alien to the main provision. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness 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, multicomplex or something composed of or made of many interrelated parts, as for example, a multi-purpose building. Thus, the word 'commercial complex' means 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 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 Wealth-tax Act. Therefore, for the purpose of Sub-clause (5) of Claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Clause (i) together with exceptions provided in Sub-clauses (3) and (5). Therefore, the CIT (A)'s observation that if the interpretation canvassed by the assessee is to be accepted it would make Section 2(ea)(i) inoperative because every building or part of building used for commercial purposes shall be claimed to be a part of commercial establishment or complex, is not correctly made out. Merely because any building or land appurtenant thereto is used for commercial purposes would not that by itself is sufficient To br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset vide exception provided in Sub-clause (2) below to Section 2(ea)(i) of the Act. In this, sense, we may, therefore, state that mere because of the fact that any building or land appurtenant thereto used for commercial purposes would not come within the ambit of Sub-clause (2). (3). and (5) unless for the purpose of Sub-clause (2) it forms part of stock in trade, for the purpose of Sub-clause (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-clause (5) property itself was in the nature of commercial establishment or complex and used in a business or trade carried thereon. 23. One of the reasons given by the AO in rejecting the assessee's claim of treating the properties in question as exempted, was that the provisions of Subclause (5) of Clause (i) of Sub-section (ea) of Section 2 are applicable only in the case of property as a single unit because the word used there is "any property in the nature of commercial establishments or complexes", but in the case of the assessee there is no single unit, but there are four properties in four separate buildings. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnection, we may refer to Section 13 of the General Clauses Act, 1897, which reads as under: 13. Gender and number.- In all Central Acts and Regulations, unless there is anything repugnant in the subject or context.- (1) words importing the masculine gender shall be taken to include females; and (2) words in the singular shall include the plural, and vice versa. 27. In the enactment provided under Section 2(ea)(i), no contrary Legislative intent has been given. We are, therefore, of the view that single is included in plural, and if a plural word is used, the singular automatically comes within its ambit. Therefore, "any house", or "any property", or "any building" shall include all houses, or some of them or one of them, as the case may be. Therefore, merely because the assessee has 4 commercial establishments or complexes at 4 different places can that by itself be a basis to hold that the property in question does not come under the purview of "any property in the nature of commercial establishment or complexes". If the assessee owns more than one property in the nature of commercial establishment or complexes, the exemption shall be available to all such properties an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used for the purpose of any business or trade carried on in those commercial establishments or complexes. We are of the view that this Sub-clause (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 relates to or engaged in or used for commerce or trade. 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 word 'commercial complex' means 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 interrelate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d." 6. Brief facts stating that AO treated the following properties asset i.e. forming part of the asset u/s 2(ea) of the Act. Aggrieved, assessee preferred appeal before CWT(A)-XIX, Kolkata who deleted the disallowance by observing in para-5.2 and 5.3, which reproduced as under:- "5.2 I have considered the factual aspect of the case and taken note of the submissions made by the appellant. In section 2(ea), definitions of assets have been noted. Here is specific exclusion of house for residential or commercial purposes which forms part of stock-in-trade. All the three assets which have been noted above do form part of the stock in trade as they have been acquired for the purpose of construction of flats and sold. In respect of the advance of Rs. 50,000/- which is given for 7/1, Serang Lane, Kolkata, fact is that it is only an advance and was received back also as the deal did not materialize. 5.3 I am of the view that the amount of Rs. 1,18,57,204/- relating to the properties as noted by the AO including closing stock of 88, Taltala Road, are outside the definition of asset as per section 2(ea) of the Act and accordingly cannot form part of taxable wealth. In respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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