COMMISSIONER OF WEALTH TAX Vs. NARAYAN T.BADDI

JUDGEMENT

(1.) BY this appeal under section 27A of the Wealth Tax Act, 1957, the appellant -revenue has challenged order dated 01.06.2005 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'D' (hereinafter referred to as the 'Tribunal') in WTA No.62/Ahmedabad/2004.

(2.) BY an order dated 27.09.2006, this court, while admitting the appeal had formulated the following substantial question of law:

(3.) THE assessee carried the matter in appeal before the Commissioner (Appeals), contending that the definition of "net wealth" read with the definition of "asset" in section 2(ea) of the Act does not include a commercial building/property let out to a tenant and hence, the same cannot be subjected to wealth tax. It was contended that though the value of the property in question was shown as part of the taxable wealth in the return filed by the assessee, as per the provisions of law, the same was not subject to wealth tax and therefore the addition of Rs.1,24,42,237/ - should be deleted. The Commissioner (Appeals) observed that in the proceedings under the Income Tax Act, 1961 the receipt of the rent from the property situated at Worli was taxed as "income from house property" and it was held that the income from the said property is not business income. According, to him, the asset was not a commercial asset and consequently not exempt from the definition of "assets" for the purpose of charge of wealth -tax. He, therefore, did not accept the claim of the assessee that the property was exempt under section 2(ea)(1)(5) of the Act. The Commissioner (Appeals) further observed that the property had been included in the net taxable wealth not only because the assessee had declared the asset in the computation of wealth tax but because on facts the asset was not a business asset.