Brief Facts of the Case
The assessee company derived rental income of Rs.68,94,644/- in respect of its property situated at GIDC Estate, survey No.434/1 and 982 by leasing the same to its associate concern M/s. Patel Alloy Steel Pvt.ltd. The A.O. was of the view that since the assessee was using its building for commercial purposes, the same was liable to be assessed under Wealth Tax Law. He computed value thereof as Rs.7,32,55,588/- as per Rent Capitalization under schedule-III/B of the Act, deducted basic exemption of Rs.15 lacs and computed the taxable wealth under the provisions of the Act amounting to Rs.7,17,55,588/- in question.
Question of Law
Whether Wealth Tax is applicable on industrial property?
Contention of the Assesse
The assesse submitted that Wealth-tax Act has been substantially amended with effect from 1-4-1995. The provisions of the W.T. Act until amendment provided for levy of wealth-tax on all the assets except those items which were specifically exempted from Wealth-tax. However, after amendment only specified assets are subjected to charge towards tax and all other assets are outside the tax net.
For the purpose of levy, assets are classified as two categories one as productive and other as non productive. Under the provisions of amended Act, tax is levied only on non productive assets such as residential house, urban land, jewellery, bullion, motor car etc. In the case in hand, industrial plots are being utilized as productive assets. Accordingly, as per the provisions of amended Wealth-tax Act, these assets are out of wealth-tax net.
Case laws relied on : Satvinder Singh Kalra v/s. DCVVT reported in 112 TTJ (,Pune)J89
Contention of the Revenue
The A.O. was of the view that since the assessee was using its building for commercial purposes, the same was liable to be assessed under Wealth Tax Law.
The A.O. took figure of actual rent received of Rs.68,94,644/- from the assessment order dtd.31-12-2007.
Held by the ITAT
The order on the basis of which the AO computed the rent was contested further in appeals and Hon’ble ITAT in ITA No.1165/Ahd/2009 dtd. 31-3-2011 had set aside this order to the file of Id. A.O. This way, the very assessment order which was basis of rent receipt, does not exist any more. Accordingly, net wealth worked out on the basis of rent receipt for the A.Y. 2004-05 will also not subsist.
It has come on record that the assessee has been letting out its plots in question to its sister concern in lieu of charging rent. The Revenue does not rebut this crucial finding. The assessee filed copy of the tribunal’s order dated 17.4.2015 in income tax proceedings of the very assessment year determining ‘ALV’ of the plots in question. We observe in these facts that once the impugned plots are used for commercial/business purposes, they are exempted from being assessed under wealth law as per Pune bench decision (supra) of the tribunal. The Revenue fails to point out any distinction on facts or law.
We affirm lower appellate findings and reject Revenue’s arguments accordingly. This Revenue’s appeal is dismissed.