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M/s. Navin Vanijya Pvt. Ltd. Versus A.C.W.T., CC-IV, Kolkata

2016 (10) TMI 278 - ITAT KOLKATA

Asset for the purpose of wealth tax - whether house property which has been let out to a tenant would be outside the ambit of wealth tax under section 2(ea)(i)(v) of the Wealth Tax Act? - Held that:- Considering the submission of assessee that the memorandum explaining the provision in the finance No.2 Bill, 1998 under the head “incentives proposed under the Wealth Tax Act”, it is clarified that wealth tax is not levied on productive assets. In view of this logic, it is very much clear that weal .....

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ed by the assessee is allowed. - Commercial complex - whether it is an asset? - Held that:- We hold that the subject mentioned property is a commercial complex and is a productive asset deriving rental income of ₹ 15,00,000/- per annum. It is well settled from the Memorandum explaining the provisions in the Finance No. 2, 1998 under the head "incentives proposed under the wealth tax act" that wealth tax is not to be levied on productive assets. We hold that the subject mentioned proper .....

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ar 2006-07 and 2007-08, are directed against the order passed by the Ld.Commissioner of Income-Tax(Appeals), Central-I,Kolkata in Appeal No.153/CIT(A) C-1/CCIV/ 10-11, and appeal No.154/CIT/(A) C-1/CC-IV/10-11, dated 1st July, 2014, which in turn arise out of an order passed by the ld. Assessing Officer under section 17/16(3) of the Wealth-Tax Act, 1957 (in short, the Act), dated 3/12/2010 & 2/12/2010 respectively. 2. Both these appeals (cited above) pertain to same assessee and common issue .....

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ax Act, 1957.The assessee raised the issue that the house property under consideration is not an asset for the purpose of wealth tax and the reasons recorded by the Assessing Officer are not valid. 4. The appeal in WTA No.43/Kol/2014 pertaining to assessment year 2006-07, is taken as the lead case. The ld AO noticed that the assessee company received rent of ₹ 15 lakhs during the assessment year 2006-07 from a house property. The rent so received was reflected in the return of income as in .....

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ii) of the Wealth-Tax Act, 1957. The AO valued the said property as per Part-B of Schedule-III of the Wealth Tax Act. Thus, it was clear that the assessee was liable to pay wealth tax in respect of net wealth for the assessment year 2006-07, but no return of wealth was filed. Therefore, reasons were recorded and notice under section 17 of the Act was issued on 31st March, 2010. In response to notice under section 17 of the Wealth Tax Act, 1957, return of wealth was filed on 07.05.2010, declaring .....

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perty under consideration was a commercial complex and consequently the same was exempt in view of section 2(ea)(i)(5). I have perused the assessment order and considered the submissions made on behalf of the assessee. I find that the assessee could bring no positive material on record to substantiate its claim that the property under consideration was a commercial complex. The documents produced by the assessee can at best suggest that the property was being utilised for commercial purposes. Bu .....

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assessee has contended that the AO was not justified in adopting the rental method for determining the value of the property under consideration. However, no arguments were made in support of this ground during the course of the appellate proceedings. Ground no 3 is dismissed. The order of the AO is upheld. Ground no 4 is general in nature. 4.1 Not being satisfied with the order of the ld. CIT(A), the assessee is in further appeal before us on the following grounds: 1. That in the facts and cir .....

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without and base, presuming that house property has escaped from the wealth tax. The ld. AO treated the let out house property as an asset under section 2(ea)(ii) of the Wealth Tax Act, 1957, whereas it is a productive asset and does not fall in the ambit of wealth tax.The ld. AR for the assessee submitted that the memorandum explaining the provision in the finance No.2 Bill, 1998 under the head incentives proposed under the Wealth Tax Act , it is clarified that wealth tax is not levied on produ .....

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ty belonging to the assessee is not correct. Hence, ground no.1 raised by the assessee is allowed. 4.3 In the result, the ground No.1 raised by the assessee is allowed. 5. Ground No. 2: Commercial complex- whether it is an asset? Ld. AR submitted that it is abundantly clear that those residential properties that have been let out for a period of 300 days in a year, and it is also proposed to exempt commercial establishments and complexes from the ambit of Wealth-Tax Act. It is, thus, clear that .....

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is covered by the coordinate bench decision of this tribunal in the case of WTO vs Ferrolite Products Ltd reported in (2015) 55 taxmann.com 285 (Kolkata Tribunal). The facts before this tribunal in the said case is that the assessee rented out premises to 'D' Ltd and rental income was assessed under the head 'income from-house property'. The assessee claimed that the said property was in the nature of commercial establishment as per section 2(ea)(i)(5) of the Act and thus it coul .....

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ft namely, the factory building, courtyard, electrical substation, labour quarters, office and godown etc. The assessee rented out this premises to M.S Dalmia"& Co Ltd for a rent of Rs..12 lakh per annum and this rent was assessed under the head 'Income from House Property. From the very reading of Sub-clause (5) it is clear that this covers all those properties which in the nature of commercial establishment or complex meaning thereby that the property must be in the nature of comm .....

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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 mu .....

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r the Act. Further, the Memorandum explaining the provisions in the Finance No. 2 Bill, 1998, under the head "Incentives proposed under the Wealth-tax 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 three hundred days in a year, and, it is also proposed to exempt commercial establishments and complexes from the am .....

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