TMI Blog1999 (12) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... m income-tax under section 44 of the National Dairy Development Board Act. It was claimed that the hostels owned by the NDDB are meant for the training of the staff of co-operative union/federation which is one of the objectives of the NDDB. Accordingly it was claimed that the assets owned by the NDDB in the form of Hostels were used for achieving overall objects mandated by the Parliament and as such they were the business assets and not liable to wealth-tax. The wealth as per the return filed by the assessee for assessment year 1993-94 comprised of the following: Immovable Assets : (i) Value of Guest House Bldg. 33,18,200 (ii) Hostel Buildings 80,20,649 -------------------- 1,13,38,849 Movable Assets: Motor Car/Vehicles 80,60,000 -------------------- 1,93,98,849 --------------------- The Assessing Officer after considering the submissions of the assessee held that the Parliament has only exempted the income of NDDB from income-tax but the wealth of the NDDB has not been exempted from the wealth-tax and since the property held by the NDDB which has status of a company for the purpose of Wealth-tax Act, is not under Trust or other legal obligation for any publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(ea)(i) and therefore, the wealth-tax is payable thereon ?" It was pleaded that the said provision was brought into the Wealth-tax by the Finance Act, 1992 to impose wealth-tax on non-productive assets. The ld. AR of the assessee referred to Speech of the Finance Minister reported in 194-ITR (St) 21 paragraph 67 in this regard which clearly indicated that the wealth-tax should be levied only in respect of non-productive assets such as residential houses including farm houses which are not used for commercial purpose. It was pleaded that the hostels owned by the NDDB are productive assets used for commercial purpose of Dairy Development. From the above, the ld. AR of the assessee pleaded that the object and purpose of the insertion of section 2(ea) defining the assets was not to tax a productive asset or a commercial asset. It was pleaded that the hostels are meant for temporary stay of trainees who are mostly farmers who come to the development door for getting training in Animal Husbandry including upkeep of cattles and other related fields of Dairy Development so as to promote a white revolution in the country. It was submitted that the Departmental Authorities have taken a ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealth represented by the value of hostels. It was submitted that it was only by way of a note that the assessee claimed that the value of hostels is not liable to wealth-tax. It was pleaded that the provisions of section 2(ea)(i) are quite clear in this regard and the Departmental Authorities were justified in levying the tax on the value of hostels included in the total wealth of the assessee. He accordingly supported the orders of the Assessing Officer as well as CWT(A). 8. We have considered the rival submissions and have also gone through the orders of the Assessing Officer as well as CWT(A). The first point on which we are expected to give our decision is as to whether the assessee is liable to wealth-tax or not. As per the provisions of section 3 of the W.T. Act, 1957, wealth tax is liable to be charged in respect of net wealth on the corresponding valuation date of every individual, HUF and company at the rate or rates specified in Schedule I. Thus a company is liable to wealth- tax in terms of charging section 3 of the Act. The assessee, NDDB has been constituted by an Act of Parliament called the NDDB Act, 1987 and it was formed by merger of two bodies viz. erstwhile ND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public purpose of charitable nature. Unless both these ingredients are satisfied the assessee is not entitled to exemption in respect of assets held by it because under the W.T. Act, holding of assets itself rendered the person liable for tax and if such asset is held for a public purpose which was both charitable and non-charitable in nature, the assets held by the assessee are liable for tax irrespective of whether it is applied solely for charitable purpose or for non-charitable purpose. Reference in this connection may be made to the decision of the Hon'ble Andhra Pradesh High Court in the case of CWT v. Hyderabad Race Club [1978] 115 ITR 453. The decision of the Hon'ble Supreme Court in the case of CWT v. Ellisbridge Gymkhana [1998] 229 ITR 1 rather supports the case of the Revenue because in the case of Ellisbridge Gymkhana it was not a company but an AOP/BOI. Thus taking into consideration the totality of the facts and circumstances of the case and in particular section 44 of the NDDB Act which exempts the income of NDDB from income-tax only, we are of the opinion that the Departmental Authorities were justified in rejecting the claim of the assessee for exemption from Wealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r residential purposes and which is allotted by a company to an employee or an officer or a director who is in whole-time 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." From the above it is clear that for assessment years 1993-94 to 1996-97 a residential unit used for a commercial purpose was not liable to wealth-tax. In the case before us the hostels owned by the assessee were meant to be used for the residence of farmers and other representatives of various co-operative societies who attend various courses/workshops organised by NDDB. The number of participants in various programmes in some courses will vary from 100 to 1000 and the hostels were meant to accommodate the participants during the course of training programmes which were carried on in furtherance to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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