TMI Blog2003 (11) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... BALASUBRAMANIAN J.-Tax Case No. 83 of 1998 is a reference at the instance of the Commissioner of Wealth-tax with reference to the assessment year 1988-89 of the assessee. The question of law referred by the Income-tax Appellate Tribunal under the Wealth-tax Act, 1957, reads as under: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that property let out by the assessee was not an asset exigible to wealth-tax within the meaning of section 40(3) (vi) of the Finance Act, 1983?" Tax Case No. 230 of 1998 is a reference at the instance of the assessee and the question of law referred by the Income-tax Appellate Tribunal at the instance of the assessee for the assessment year 1986-87 reads as under: "Whether the Tribunal was right in law in holding that the building Asoka Plaza is not to be treated as 'plant' of the applicant's business of real estate developing and managing office and commercial complexes duly authorised by the applicant's memorandum of association of the company but is to be treated as 'building' chargeable to wealth-tax in the hands of the applicant under the provisions of section 40 of the Finance Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned junior standing counsel for the Income-tax Department and Mr. R. Meenakshisundaram, learned counsel appearing for the assessee. The submission of learned counsel for the Revenue is that the building, viz., Asoka Plaza was used by the assessee only as a shopping complex and the shopping complex is not one of the items excluded from the levy of wealth-tax and the entire building with the land appurtenant thereto is liable to wealth-tax. On the other hand, Mr. R. Meenakshisundaram, learned counsel appearing for the assessee, submitted that the property is a commercial asset and the intention of the Legislature when enacting the Finance Act, 1983, is not to levy wealth-tax on commercial assets. He submitted that the speech of the Finance Minister while introducing the Finance Act, 1983, shows that the wealth-tax was intended only on properties transferred to closely held companies and the levy of wealth-tax is limited to a levy on unproductive assets and not on commercial assets. Learned counsel therefore submitted that the commercial asset belonging to the assessee is exempt under the provisions of the Wealth-tax Act. Learned counsel also submitted that the assessee has not cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumventing tax avoidance by such persons, I propose to revive the levy of wealth-tax in a limited way in the case of closely-held companies. Accordingly, I am proposing the levy of wealth-tax in the case of closely-held companies at the rate of 2 per cent. on the net wealth represented by the value of specified assets, such as, jewellery, gold, bullion, buildings and lands owned by such companies. Buildings used by the company as factory, godown, warehouse, hotel or office for the purposes of its business or as residential accommodation for its low paid employees will be excluded from net wealth." A reading of the speech of the Finance Minister shows that section 40 of the Finance Act was introduced as a tax avoidance measure and sub-section (3) of section 40 of the Finance Act shows that the levy of wealth-tax is not confined to assets transferred to closely held companies by the director of the company or his relatives. Section 40 of the Finance Act shows that it covers not only unproductive assets like gold, silver, platinum, stones, ornaments, utensils but also other properties like land and building appurtenant thereto and motor cars. Hence we are unable to accept the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings installed in the hotel would constitute "plant". We are of the view that the decision of the Supreme Court has no application, as we are concerned with the question whether the building, viz., commercial complex owned by the assessee would fall within the clause found in section 40(3)(vi) of the Finance Act, 1983, and therefore, the question whether it is a plant or not is not of much relevance. Learned counsel for the assessee also relied upon the decision of the Kerala High Court in CWT v. Sara Varghese [1988] 170 ITR 436 and the Kerala High Court was dealing with a case of land which was used for agricultural purposes. The Kerala High Court held that the such land would fall within the definition of the expression "business premises" as defined in rule 1(i), Para. B, Part I of the Schedule to the Wealth-tax Act, 1957. This decision also has no application as we are concerned with the question whether the commercial complex would fall within clause (vi) of sub-section (3) of section 40 of the Finance Act, 1983. The next question that arises is whether the assessee is entitled to the exemption in view of the exclusionary clause found in section 40(3)(vi) of the Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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