TMI Blog2018 (6) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... By Assessee : Shri G. Hangshsing, CIT-DR By Revenue : Shri M. Tiwari, FCA ORDER Per S. S. Godara, Judicial Member These two Revenue s appeals for assessment years 2008-09 and 2009- 10 along with assessee s Cross Objections thereto arise against the Commissioner of Income Tax (Appeals)-12, Kolkata s separate orders; dated 14.03.2017 and 22.03.2017; respectively, in proceedings u/s 23 of the Wealth Tax Act, 1957; in short the Act . 2. A perusal of the Revenue s pleadings suggests that it challenges the CIT(A) s findings holding the assessee s assets (freehold land situated at Budge Budge as well as its registered office namely Magma House , 24 Park Street, 9th Floor Kolkata-16) to be not the charging wealth for the purpose of the impugned wealth tax assessments. The assessee s Cross Objections on the other hand assail correctness of the impugned re-opening taken recourse by the Assessing Officer as upheld in the lower appellate proceedings. 3. It is evident that the CIT(A) s order for AY 2008-09 followed in AY 2009- 10 reads as under:- 5.1 I have considered the assessment order and the written submissions filed by the A/R of the appellant. I find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the 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, 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 income from house property. As per the provision of section 2(ea)(ii) of the Wealth Tax Act, 1957. Asset means any building or land appurtenant thereto (hereinafter referred to as house ), whether used for residential or commercial purposes or for the guest house purpose. The property from which rent was received was not used by the assessee for its business purpose. Therefore, the value of the property was chargeable to wealth tax, as the property was an asset within the meaning of section 2(ea)(ii) of the Wealth-Tax Act, 1957. The AO valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the ld. CIT(A), the assessee is in further appeal before us on the following grounds: 1. That in the facts and circumstances of the case the ld. CIT(A) erred in confirming the action of the ld A.O. in initiating proceedings u/s 17 and assuming jurisdiction u/s 17. WTA No.43 /Kol/2014 M/s. Navin Vanijya Pvt. Ltd. 4 2. That in the facts and circumstances of the case, the Ld. C.I.T. (A) erred in confirming the action of the ld. Assessing Officer in treating the commercial complex as an asset for the purpose of the wealth tax. 4.2 The Ld AR for the assessee has submitted that the Assessing Officer reopened the assessment under section 17 of the Wealth Tax Act, 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 productive asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The facts emerges are that total area of land consists of 20164 sft out of which area is 10771 sft 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 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. 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 'establishmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld 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. 5.1. Hence respectfully following the said decision, we hold that the subject mentioned property shall be exempt u/s 2(ea)(v) of the Act and therefore outside the ambit of taxable wealth. Accordingly, the ground no.2 raised by the assessee in this regard for both the assessment years are allowed. 5. Learned Departmental Representative is very fair in not pointing out any exception therein. We therefore decline Revenue s sole substantive ground as well as its two appeals WTA 07 and 08/Kol/2017. Assessee s Cross Objections challenging validity of re-opening are rendered infructuous. 6. This two Revenue s appeals WTA 7 and 8/Kol/2017 are dismissed and assessee s Cross Objection CO No.90 and 91/Kol/2017 are dismissed as rendered infructuous. Order pronounced in the open court 08/06/2018. - - TaxTMI - TMITax - We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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