TMI Blog1998 (8) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... rties. The Assessing Officer included the rental receipts as business income and, therefore, he did not consider the factory sheds thereby as includible for the purpose of taxable wealth. The CWT after providing an opportunity, set aside the assessment order with a direction to reframe the assessment order by taking into consideration that the rental income is the income from the house property, and same may be included in the total wealth of the assessee as per rule 1BB of the Wealth-tax Rules. Being aggrieved, the assessee has come in appeal before the Tribunal with seven grounds which are in fact only related to the question of whether the rental income is a business income or an income from house property for the purpose of wealth-tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1993] 203 ITR 350 (Cal.), he justified the action of the CWT under section 25(2) of the Wealth-tax Act. He also submitted that in the previous assessment year the wealth was assessed in favour of the department and the assessee has not filed any appeal. So, the same is binding on the assessee for the assessment year under consideration. In the subsequent years, section 40 of the Finance Act, 1983 was abolished. 5. We have heard the rival submissions of both the parties very carefully and gone through the material available on record. It is true that the Hon'ble Calcutta High Court in Ajmera Industries (P.) Ltd.'s case (supra) has taken the income derived from letting out the surplus of the non-factory building including godown as busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to be assessed as income from business. If only the commercial assets are leased out the income would continue to be income from business. The question has to be determined in the light of the nature of the transaction evidenced by the terms of the agreement. We have also gone through the agreement dated 16-11-1975 between the tenant and the assessee where it has been mentioned that the assessee is absolute owner of the factory, land and building under consideration (pages 31 and 32 of the Paper Book). As per clause 5(e) of the Agreement, the tenant was entitled to use and occupy the premises for their office and business purposes and to discharge all charges and expenses for consumption of electricity, licence, fees and other/or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of wealth in the manner envisaged in section 40 ibid was found necessary. The Finance Minister in his Budget Speech observed "building used by the company as factory, godown, warehouse, hotel or office for the purpose of its business or as residential accommodation for its low-paid employees will be excluded from net wealth." 10. So, exclusion was contemplated where the properties are wholly or partly the accessory to carrying on the business. Needless to mention that the mischief which is sought to be remedied is the tax avoidance through transfer of unproductive wealth to closely held companies. We also feel that the construction of the provision particularly in the context of a situation not foreseen by the law-makers should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Allahabad High Court in the case of Bithal Das v. CWT [1983] 141 ITR 228 / [1982] 10 Taxman 51 observed that the arrears of the rent were assets of the assessee liable to be included in his net wealth. Needless to mention that the purpose of the wealth is to have the income or capitalisation of the income. Classical valuation practice hinges on income or incomes expectancies and their capitalisation. Even intangible additions made in the income-tax assessment are liable to be included in the net wealth of the assessee, as per CWT v. Mishrilal Jain [1986] 161 ITR 583 / [1987] 30 Taxman 186 (Pat.). In view of above discussion, and facts and circumstances of the case, it is clear that the whole premises was not letted out. The nature of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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