By C. N. Vaze, Shailesh Kamdar, Chartered Accountants
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24 (2007) 112 TTJ 489 (Pune)
Satvinder Singh Kalra v. Dy. CWT
WTA Nos. 34 to 37 (Pune) of 2005
A.Ys. 1999-2000 to 2002-3. Dated : 29-9-2006
S. 2(ea) of the Wealth Tax Act 1957 — Office premises let out
on leave-and-licence basis and used by licensees for their business are in the
nature of commercial establishments and not includible in net wealth.
For the relevant assessment years, four office premises owned
by the assessee and let out by him were claimed as specifically exempt from net
wealth u/s.2(ea)(i)(5) as commercial establishments. The Assessing Officer
treated them as ‘assets’ defined u/s.2(ea). The CWT(A) confirmed the Assessing
Officer’s order.
The Tribunal held as under :
(a) If the assessee owns more than one property in the
nature of commercial establishments or complexes, the exemption shall be
available to all such properties and cannot be restricted to any one of them.
— Shri Balaganesan Metals v. M. N. Shanmugham Chetty,
(1987) 2 SCC 707, and
— CIT v. Arvind Investments Ltd., (1991) 94 CTR
(Cal.) 263; (1991) 192 ITR 365 (Cal.)
(b) A property would fall within the exceptions under
sub-clause (5) of clause (i) of S. 2(ea), if it is in the nature of commercial
establishment or complex and is also used for the purpose of any business or
trade, whether by the assessee or anybody else.
The Tribunal noted as under :
(1) In the main provisions as well as in the exception
clauses, the Legislature has used the words like ‘any building’, ‘any house’,
‘any residential property’, and ‘any property’. Therefore, ‘any house’, or
‘any property’, or ‘any building’ shall include all houses, or some of them or
one of them, as the case may be.
(2) Two of the four let out commercial properties were used
by the licensees for commercial purposes. Therefore, having regard to the
nature of the property as well its use, the property can be classified as
commercial establishment within the meaning of S. 2(ea)(i)(5) and, as such,
value thereof is not includible in the net wealth chargeable to tax under the
WT Act.
(3) The third property was given on rent on
leave-and-licence basis to National Eggs Research Institute for office
purposes. The National Eggs Research Institute has taken the premises for the
purpose of their dispensary-cum-laboratory and not for the purpose of carrying
on any business or trade. Since the property was not in use and occupation for
the purpose of any business, it is not covered by sub-clause (3) of clause (i)
of S. 2(ea). It cannot be said that it is in the nature of a commercial
establishment or complex. Therefore, this property was correctly included by
the Assessing Officer in taxable net wealth.
(4) In respect of the fourth property given on
leave-and-licence basis, it is not clear as to whether the property was given
for the purpose of carrying on business by establishing an office by the
licensee or for the purpose of residence of its any employee. No other
documents are on record to verify as to whether this property in question was
used in a business or trade carried on by the licensee. As to the nature of
the property, there is no dispute that it is in the nature of commercial
property being in the nature of office premises. But the second criteria as to
whether the property is used for the purpose of business or not is not
established from the papers available on record, so as to treat the same as a
commercial establishment within the meaning of sub-clause (5) of clause (i) of
Ss.(ea) of S. 2. This matter was restored to the file of the Assessing Officer
for further enquiry and verification.
