Wealth Tax: Exemption: Section 40(3)(vi) of Finance Act, 1983: A. Ys. 1988-89 to 1992-93: Assessee in leasing business: Property given on lease is asset used in business: Property falls within specified assets u/s. 40(3)(vi): Exemption available.

Assessee was carrying on the business of leasing. The assessee had let a hotel building and the lessee used it as a hotel. In the A. Ys. 1988-89 to 1992-93, the assessee claimed exemption from wealth tax in respect of the property u/s. 40(3)(vi) of the Finance Act, 1983 as an asset used in the assessee’s business. The Assessing Officer rejected the claim. The Tribunal allowed the assessee’s claim.

On appeal by the Revenue, the Madras High Court upheld the decision of the Tribunal and held as under:

“i) One of the conditions to be satisfied by the assessee u/s. 40(3) was that, the asset must be used in the assessee’s business. The assets let out were used in the leasing business. Not all the assets used in the business were exempt from the purview of the wealth tax. Once the asset let out came within the specified clause as contemplated u/s. 40(3)(vi) of the Finance Act, 1983, the assessee was entitled to exemption.

 ii) One of the objects of the assessee was leasing and another object was running a hotel in the property. Accordingly, the assessee had leased out the property as a hotel and the lessee also used the property as a hotel. Therefore, the assets came within the specified assets as contemplated u/s. 40(3)(vi) of the Finance Act, 1983. The assessee was entitled to exemption.”