MAYNAK PODDAR HUF Vs. WEALTH TAX OFFICER

JUDGEMENT

(1.) In this case for the asst. year 1993-94, the assessee's commercial building let out to tenants was treated as an asset within the meaning of Section 2(ea) of the WT Act, 1957, as it stood then.

(2.) Mr. Khaitan, learned counsel appearing for the appellant, points out that until the provision was amended there was no scope for including a commercial building within the definition of 'asset' and therefore, it was not taxable under the WT Act, 1957. In elaborating his contention, he had referred to the charging section viz., Section 3 of the Act, which propose to impose tax on 'net wealth' exceeding a particular valuation. 'Net wealth' as defined in Section 2(m) means the aggregate value of all the assets subject to the provisions contained therein. The word 'asset' used in Section 2(m) as defined in Section 2(ea) does not include commercial building. In order to emphasize that a commercial building was not an asset Mr. Khaitan had led us through the Finance (No. 2) Bill, 1996, pointing out from Clause 54 at (1996) 220 ITR (St) 147. He contends that the amendment has introduced something new, since explained at p. 238. According to him, the provision is clear. This is further clarified at p. 282 of 220 ITR. Having regard to this proposition, according to him, there is no scope for taxing the commercial building let out to tenant as an asset under the WT Act. Relying on the decision in CIT v. Ajax Products Ltd., he contends that an item of property can be taxed only if it can be clearly established from the charging section that it is so chargeable and not otherwise. He also relied on the decision in CIT v. Bhaskar Mitter (1994) 73 Taxman 437 (Cal) at p. 442 (para 8) and contended that even if the property was shown in the return as asset, yet the same will not operate as an estoppel on the assessee to claim subsequently that it is not an asset and that the taxing authority is not supposed to tax a building which is not otherwise taxable under the charging section.

(3.) The learned counsel for the Revenue, on the other hand, contends that so far as the assessee is concerned, the building is not a commercial building at the hands of the assessee. It may be a commercial building at the hands of the tenant to whom it is let out. The assessment is to be made at the hands of the assessee. For the assessee it is a building. It is immaterial whether it is used for commercial or residential purpose. If the building was let out as residential building, then it could have definitely been taxable as an asset at the hands of the assessee as a residential building. Therefore, the letting out as a commercial building when the same building could be used as residential one could not change the position and would definitely be chargeable as an asset. He also attempted to draw an analogy from the IT Act, 1961, where the income from such property is treated as an income from house property without making any distinction in between residential or commercial building so as to treat the same as an asset.