Income Tax Appellate Tribunal - Kolkata
Sri Adhar Gupta, Kolkata vs Department Of Income Tax on 14 August, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH: KOLKATA
[Before Shri Mahavir Singh, JM & Shri B. P. Jain, AM]
W.T.A. No.39/Kol/2013
W.T.A. No.09/Kol/2014
Assessment Year: 2006-07
Adhar Gupta Vs. C.W.T. Kol-XI, Kol
C/o S.L.Kochar, Advocate 10B, Middleton Row, Kol-71
86, Canning Street, Kolkata-01
(PAN: AEAPG 8966 P)
Income Tax Officer, Ward-33(3), Kol Vs. Sri Adhar Gupta
10B, Middleton Row, Kol 40H, New Market, Kol-87
(Appellant) (Respondent)
Date of hearing: 26.06.2015
Date of pronouncement: 14.08.2015
For the Assessee : Shri Anil Kochar, Advocate
For the Revenue: Smt Sucheta Chattopadhyay, JCIT-DR
ORDER
Per Shri Mahavir Singh, JM:
These cross-appeal by assessee and Revenue are arising out of orders of Commissioner of Wealth Tax, Kolkata-XI & Kolkata-XIX of dated 18-10-2013 & 28.11.2013. Assessment was framed by WTO, Ward-33(3), Kolkata u/s163)/17 of the Wealth Tax Act, 1957 (hereinafter referred to as "the Act") for Assessment Years 2006-07 vide his orders dated 08.10.2013 & 19.12.2011 respectively.
First we take up assessee' appeal in WTA No.39/Kol/2013.
2. The only issue in this appeal of assessee is against the order of CWT(A), Kolkata-XI u/s. 25(2) of the Act. For this, assessee has raised following grounds:-
"1. For that the order u/s./ 25(2) of the Wealth Tax Act, 1957 made by the Ld. Commissioner of Wealth Tax setting aside the assessment framed by A.O u/s. 16(3)/17 whereby AO has been directed to add the value of the asset (in dispute) in the taxable wealth of the appellant is bad-in-law.
2. For that the assumption of jurisdiction u/s. 25(2) by the Ld. Commissioner of Wealth Tax proceeded on the basis of proposal made out by the AO and not on calling and examining the records of the appellant and this jurisdiction renders the proceedings drawn invalid.
For that the appellant was not given any opportunity of being heard by the Ld. Commissioner of Wealth ax and as such the order is liable to be vacated.2 WTA No.39/K/13 & 9/K/14
Adhar Gupta. AY 2006-07
4. For that, without prejudice, the submissions made by the appellant in writing ought to have been accepted by the Ld. Commissioner of Wealth Tax and proceedings drawn u/s 25(2) of the Wealth Tax Act, 1957 ought to have been revoked."
3. Briefly stated facts are that original wealth tax assessment for the relevant assessment year 2006-07 was completed u/s. 16(3)/17 of the Act on 19.12.201. Subsequently, the CWT(A)-XI, Kolkata on examination of records found that the assessment framed by AO is erroneous in so far as prejudicial in the interest of the revenue due to following reasons:-
"It was found from the relevant assessment record that the value of the following asset was not considered while computing the taxable wealth of the assessee:-
Shop at Lucknow : Rs.32,28,000/-
But in the Assessment Year 2005-06, the value of the above asset was added while computing the assessee's taxable wealth."
The CWT-XI, Kolkata directed the AO to include the value of shop at Lucknow to Rs.32.28 lakh in the net wealth of assessee by observing in para-3, which reproduced as under:-
"3. The submission of the assessee has been considered and it is observed that commercial building except commercial complex is well within the definition of assets liable for w4aalthtax as per Section 2(ea)(i) of the Wealth-tax Act, 1957. The show-room is clearly a commercial building falling under the definition of assets u/s. 2(ea)(i) of the Wealth-tax Act, 1957. So far as Lease Agreement dated 09-03-2006 is concerned, the lease has been granted for a period till 31st March, 2011 i.e. 5 years from 1st April, 2006 to 31st March, 2011. During the Financial year 2005-06, i.e. the year under consideration the building was lying vacant and it was leased out only w.e.f. Financial Year 2006-07. Hence, this Lease Agreement has no implication on the facts of the case in the year under consideration. The show-room being commercial building lying vacant in this year is an asset liable to wealth tax."
Aggrieved, now assessee is in appeal before us.
4. We have heard rival submissions and gone through the facts and circumstances of the case. Admittedly, this is a shop which is situated in Lucknow and according to CWT-XI, Kolkata, during revision proceedings, this building is a 'commercial building' falling under the definition of 2(ea)(i) of the act and during the relevant financial year 2005-06 and the relevant to AY 2006-07 this building was vacant and lease agreement dated 09.03.2006 was from 01.04.2006 to 31.03.2011. But the mute question is whether the 'commercial building' i.e. shop is a definition u/s 2(ea)(i) of the Act or not. This issue is now covered by the decision of co-ordinate Bench in the case of WTO Vs. Ferrolite Products Ltd. in WTA Nos.
3 WTA No.39/K/13 & 9/K/14Adhar Gupta. AY 2006-07 47 & 48/Kol/2010, AYs 2003-04 & 2004-05 dated 06.02.2015, wherein it has been held as under:
"5. We have heard Ld. Sr. DR and gone through facts and circumstances of the case. We have gone through the order of coordinate bench of this Tribunal Pune Bench in the case of Satvinder Singh V Dy. CWT(2007)109 ITD 241(Pune), wherein the entire provision of section 2(ea) of the Act is discussed in para13 to 27 as under:-
"16. The exception provided in Sub-clauses (4) and (5) below to Clause (i) of Sub-section(ea) of Section 2 has been inserted by the Finance (No. 2) Act with effect from 1.4.99. In the Budget Speech of Minister of Finance, the Hon'ble Finance Minister has stated that housing is an area which requires our utmost attention, and, therefore, he proposed several incentives to encourage house building activity. Amongst several incentives to encourage house building activities, an exemption to certain specified properties like commercial complexes under the Wealth-tax Act was provided. (See para 100 of Finance Minister's speech reported at page 69 (St) of 231 ITR). In the Notes on Clauses on Finance Bill No. 2, 1998, it is stated that Clause 69 of the Finance Bill No. 2. 1998, seeks to amend Section 2 of the Wealth-tax Act relating to definitions. Sub-clause (b) of Clause 69 seeks to amend Sub-section (ea) of Section 2 of the Wealth-tax Act relating to the definition of assets for the purpose of Wealth-tax. Vide this clause, it was proposed to exclude let-out residential properties from the definition of asset in case the property has been let out for a period of at-least 300 days in a year. (Sub-clause (4) to Clause (i) of Sub-section (ea) of Section 2 of the Wealth- tax Act). It was also proposed to exclude any property in the nature of commercial establishment or complex from the definition of asset and these amendments should take effect from the 1st day of April, 1999 and would accordingly apply in relation to the assessment year 99-2000 and subsequent years. In the Memorandum explaining the provisions in the Finance No. 2 Bill, 1998, under the head "Incentives proposed under the Wealth-tax Act", it is clarified that wealth-tax is not levied on productive assets. In view of this logic, it is proposed that wealth tax would also not be levied on such residential properties that have been let out for a period of a minimum of three hundred days in a year, and, it is also proposed to exempt commercial establishments and complexes from the ambit of Wealth-tax Act. It is, thus, clear that the Legislature has adopted a logic that wealth-tax is not levied on productive assets, and in view of that logic, it was proposed that wealth-tax would not be levied on such residential property that has been let out for a period of minimum 300 days in a year and to exempt commercial establishments and complexes from the ambit of wealth-tax. Therefore, while construing the meaning to Sub-clauses (4) and (5) inserted by the Finance No. 2 Act, 1998 with effect from 1.4.89. the intention of the Legislature that wealth-tax is not to be levied on productive assets is to be kept in mind.
17. On reading of the main enacting provision of Clause (i) of Sub-section (ea) of Section 2, as substituted by the Finance (No. 2) Act, 1996 with effect from 1.4.97 and by the Finance Act, 1998 with effect from 1.4.99, it is clear that any building or land appurtenant thereto whether used for residential or commercial purposes fall within the meaning of "assets", however, subject to the exceptions provided there-under. Some of the building or land appurtenant thereto whether used for residential or commercial purposes have been taken out from the main provision as envisaged under Sub-clauses (1) to (5) to Clause (i) of Sub-section (ea) of Section 2 of the Wealth-tax Act. In other words, Sub-clauses (1) to (5) carve certain properties or houses out of the main enacting provision. It is thus clear that all building or land appurtenant thereto, which are whether used for 4 WTA No.39/K/13 & 9/K/14 Adhar Gupta. AY 2006-07 residential or commercial purposes, may not come within the definition of "asset"
as defined under Clause (i) of Sub-section (ea) of Section 2 of the Wealth-tax Act if any one of them is found to be covered by Clauses (1) to (5) below to Section 2(ea)(i) of the Act. Sub-clauses (1) to (5) qualifies the generality of the main enactment by providing an exception and taking out from the main provision a portion which but for the exception provided in Sub-clauses (1) to (5) would be the part of the main provision. The properties or the houses of a nature specified in Sub-clauses (1) to (5) below to Clause (i) of Sub-section (ea) of Section 2 are an exception to the main provision. The exception provided in Sub-clauses (1) to (5) must, therefore, be considered in relation to the main or principal enactment of Clause (i) of Sub-section (ea) of Section 2 of the Wealth-tax Act to which these Sub-clauses (1) to (5) stand as an exception. The properties or houses enumerated in these Sub-clauses (1) to (5) must not be read as alien to the main provision. In this view of the matter we, therefore, do not find any conflict between the main enactment of Clause (i) and the exceptions provided in Sub- clauses (1) to (5) thereto. In the light of the main enactment provided in Clause
(i) and the exception provided thereto by way of excluding the properties or the houses enumerated in the Sub-clauses (1) to (5) from the main enactment, the intention of the Legislature becomes clear that the Legislature did not intend to bring all buildings or land appurtenant thereto, whether used for residential or commercial purposes within the ambit of "assets" chargeable to tax under the Wealth-tax Act. Thus, the question of rendering the Clause (i) being redundant does not arise.
18. (not relevant to the issue before us).
19. On the other hand, Sub-clause (5) covers any property in the nature of commercial establishments or complexes. In order to cover a case under Sub- clause (5), it is not necessary that the property in the nature of commercial establishments or complexes should be occupied by the assessee for the purpose of any business or profession carried on by him as in the case covered by Sub- clause (3). Here, the nature and purpose of use of the property is material irrespective of the fact whether it is used or occupied either by the assessee himself or anybody else for the purpose of any business or profession carried on by them, as the case may be.
20. Sub-clause (5) below Clause (i) of Sub-section (ea) of Section 2 of the Wealth- tax Act reads as under:
(5) any property in the nature of commercial establishments or complexes;
On its plain reading, it appears that any property in the nature of commercial establishments or complexes are not included within the definition of "assets" for the purpose of Wealth-tax Act. To claim benefit of the aforesaid Sub-clause (5), one must prove and establish that the property claimed to be excluded from the definition of "assets", should be in the nature of commercial establishments or complexes. In other words, the property should not be of any nature other than the nature of commercial establishments or complexes. In this Sub-clause (5), "complexes or establishments" are qualified with an adjective 'commercial'. Establishment or complex, therefore, must be of a commercial in nature. The word 'commercial' means something which is used in or related to, a business or a trade. Commercial means relating to or engaged in or used for commerce. The word 'establishment' means an organization, building, construction, shop, store, concern or corporation. Thus, commercial establishment means some kind of 5 WTA No.39/K/13 & 9/K/14 Adhar Gupta. AY 2006-07 place or building or shop or store where business or trade is carried on. The word "complex" means composite, compounded, multiple, manifold, multi- complex or something composed of or made of many interrelated parts, as for example, a multi-purpose building. Thus, the word 'commercial complex' means the commercial multi-purpose building composed and made of inter-relating parts in contrast to a single commercial establishment. In the case of commercial establishment, it is not necessary that it should be composed of or made of interrelated parts. In the case of a property in the nature of commercial establishment, it is not necessary that it should be also in the nature of commercial complex. The Legislature has excluded both commercial establishment as well as commercial complexes from the definition of "asset" for the purpose of chargeability to tax under the Wealth-tax Act. Therefore, for the purpose of Sub-clause (5) of Clause (i) of Sub-section (ea), property must be of commercial complex or establishment in nature where business or trade are being carried on and the property must also be used for the purpose of any business or trade as well. A property cannot only by its very nature be classified as a commercial establishment or complex unless the same is also used in a business and nothing else. Hence, the word 'commercial establishment' or complex, as the case may be. appears to be used in the sense that the property must be in the nature of commercial property and the same must also be used for the purpose of trade or business and nothing else. In this sense of the term, we may, therefore, say that if any property though used for commercial purposes, but is not in the nature of commercial property, the same would not fall within the term 'commercial establishment' or complex used in Sub-clause (5) below to Clause (i) of Sub-section (ea) of Section 2 of the Weath-tax Act. Having regard to the object and purpose of the said Clause (i) with exception thereto, any building though used for commercial purposes, but is not in the nature of commercial property or establishments, shall not be covered by expression "any property in the nature of commercial establishment or complexes" as used in Sub-clause (5) below to Clause (i) of Sub-section (ea) of Section 2 of the Act. For the purpose of the aforesaid clause, the property must be of commercial nature implying thereby that the very nature of the property must be commercial and at the same time it must be used in a business or trade and nothing else.
21. However, from the reading of the main provision contained in Sub-clause (i) of Clause (ea) of Section 2, which is appended above, it is clear that any building or land appurtenant thereto used for commercial purposes also comes within the definition of asset, subject to the items excluded, vide Sub-clauses (1) to (5) thereto. In the main principal portion of Clause (i) the word used is "any building or land appurtenant thereto whether used for residential or commercial purpose"
but it is always subject to the exceptions provided in Sub-clauses (1) to (5) thereto. Sub-clause (3) covers only those houses, which are occupied by the assessee for the purpose of any business or profession carried on by the assessee. Sub-clause (5) covers all those properties which are in the nature of commercial establishment or complex meaning thereby that the property must be in the nature of commercial establishment or complex which in turn indicates that the property must also be actually used for the purpose of any business or trade carried on in those commercial establishments or complexes. This would mean that any house, which is not by its very nature in the nature of commercial establishment or complex, but is occupied for the purpose of any business or profession carried on not by the assessee but by somebody-else, shall be included in the definition of "asset" as would be clear from reading together the main provisions contained in Clause (i) together with exceptions provided in Sub-clauses (3) and (5). Therefore, the CIT (A)'s observation that if the interpretation canvassed by the assessee is to be accepted it would make Section 2(ea)(i) inoperative because every building or part of building used for commercial purposes shall be claimed 6 WTA No.39/K/13 & 9/K/14 Adhar Gupta. AY 2006-07 to be a part of commercial establishment or complex, is not correctly made out. Merely because any building or land appurtenant thereto is used for commercial purposes would not that by itself is sufficient To bring it within the ambit of commercial establishment or complex unless it is also established and proved that the said building by its very nature is in the nature of commercial establishment or complex. The correct meaning of Sub-clause (5) would thus be that any property which is merely used for commercial purposes would not by itself be sufficient enough to classify the same as commercial establishment or commercial complex, unless it is also proved and established that the property by its very nature is also in the nature of commercial establishment or complex. Under Sub-clause (5), the Legislature has excluded only the property in the nature of commercial establishment or complex from the definition of "asset" for the purpose of Wealth-tax Act and not all the properties which are used for commercial purposes. For the purpose of Sub-clause (5), both the criterias of the nature and use of the property being of commercial must be fulfilled.
22. We may, therefore, summarize the proposition with regard to the building used for commercial purposes as under:
(1) That any building or land appurtenant thereto used for commercial purposes shall not be excluded from the "asset" as defined under Sub-section (ea) of Section 2 of the Wealth-tax Act, unless i) any house is occupied by the assessee for the purpose of any business or profession carried on by him (Sub-clause 3), or
ii) the property by its very nature is in the nature of commercial establishment or commercial complex, being used in a business or trade carried on in the said premises (Sub-clause 5), or (iii) the house for commercial purposes which forms part of stock in trade (Sub-clause 2). Therefore, for the purpose of Item No. (3), any house may not necessarily be required to be in the nature of commercial establishment or complex, if it is occupied by the assessee for the purpose of any business or profession carried on by him, and in that case, the same shall stand excluded from the purview of assets defined Under Section 2(ea) of the Act.
Further, any property which satisfy the criteria of its being in the nature of commercial establishment or complex and also used in a business or trade carried thereon shall be covered by Sub-clause (5) below to Section 2(ea)(i) of the Act. Furthermore, any house used for commercial purposes forming part of stock in trade also stand excluded from the purview of asset vide exception provided in Sub-clause (2) below to Section 2(ea)(i) of the Act. In this, sense, we may, therefore, state that mere because of the fact that any building or land appurtenant thereto used for commercial purposes would not come within the ambit of Sub-clause (2). (3). and (5) unless for the purpose of Sub-clause (2) it forms part of stock in trade, for the purpose of Sub-clause (3) it is satisfied that the house was occupied by the assessee himself for the purpose of any business or profession carried on by him and for the purpose of Sub-clause (5) property itself was in the nature of commercial establishment or complex and used in a business or trade carried thereon.
23. One of the reasons given by the AO in rejecting the assessee's claim of treating the properties in question as exempted, was that the provisions of Sub- clause (5) of Clause (i) of Sub-section (ea) of Section 2 are applicable only in the case of property as a single unit because the word used there is "any property in the nature of commercial establishments or complexes", but in the case of the assessee there is no single unit, but there are four properties in four separate buildings. This approach taken by the AO, in our considered view, is not found to be on sound footing. In the main provisions as well as in the exception clauses, the legislature has used the words like "any building", "any house", ''any 7 WTA No.39/K/13 & 9/K/14 Adhar Gupta. AY 2006-07 residential property", and "any property". In other words, building or houses or residential property or property are qualified with the word "any".
24. In the case of Shri. Balaganesan Metals v. M. N. Shanmugham Chetty the Hon'ble Supreme Court held as follows at page 718:
The word 'any' has the following meaning : some : one of many: an indefinite number. One is indiscriminately of whatever kind or quantity. Word 'any' has a diversity of meaning and may be employed to indicate 'all' or 'every" as well as 'some' or 'one' and its meaning in a given statute depends upon the context and the subject matter of the statute. It is often synonymous with 'either', 'every' or 'all'. Its generality may be restricted by the context.
The meaning of the word "any" may therefore, imply "all", or "one of many"
"some" or "one".
25. The Hon'ble Calcutta High Court in the case of CIT v. Arvind Investments Ltd. while interpreting the word "any" used in Explanation to Section 73 of the Act has observed that "any" is a word which excludes limitation or qualification. It connotes wide generality. Its use points to distributive construction. It was further observed that the word "any" should be given a meaning as wide as possible in the context. The words "any ward of the Municipal Borough" is understood to mean "every ward of the Municipal Borough. The Hon'ble Calcutta High Court has referred to number of decisions of the foreign Courts as well as Courts of the Land, and, thus, observed that no case has been pointed out to them where the word "any" has been used in a restrictive sense so as not to include "all". They further held that they failed to see why "part" should not include "the whole". In this view of the matter, and in the light of the decisions referred to above, the word "any" should not be given a restricted meaning but should include "all", "some of them", "one of any", or "an indefinite number".
26. It is also well settled that "singular" is included in "plural". If a plural word is used, singular automatically comes within its ambit. In this connection, we may refer to Section 13 of the General Clauses Act, 1897, which reads as under:
13. Gender and number.- In all Central Acts and Regulations, unless there is anything repugnant in the subject or context.-
(1) words importing the masculine gender shall be taken to include females; and (2) words in the singular shall include the plural, and vice versa.
27. In the enactment provided under Section 2(ea)(i), no contrary Legislative intent has been given. We are, therefore, of the view that single is included in plural, and if a plural word is used, the singular automatically comes within its ambit. 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. Therefore, merely because the assessee has 4 commercial establishments or complexes at 4 different places can that by itself be a basis to hold that the property in question does not come under the purview of "any property in the nature of commercial establishment or complexes". If the assessee owns more than one property in the nature of commercial establishment or complexes, the exemption shall be available to all such properties and cannot be restricted to any one of them."
8 WTA No.39/K/13 & 9/K/14Adhar Gupta. AY 2006-07
6. From the proposition discussed by coordinate bench Pune Tribunal in the case of Satvinder Singh, Supra, we have to examine the facts of present case. The facts are that the assessee in its Balance Sheet filed along with return of income declared land and building at 160, B. L. Shah Road, Kolkata-700 053i.e. land and building separately. The total area of land consists of 20164 sft out of which covered area is 10771 sft namely, the factory building, courtyard, electrical substation, labour quarters, office and godown etc. The uncovered area is about 9393 sft on which construction is not permissible. This fact is admitted by AO vide his remand report dated 12.02.2010 and further supported by assessment order for AY 2002-03 dated 24.12.2009. The assessee rented out this premises to M. S. Dalmia & Co Ltd for a rent of Rs 12 lakh per annum and this rent was assessed under the head 'Income from House Property'. Before the AO it was claimed by assessee that its case is covered by provisions of section 2(ea)(i)(5) of the Act being the property in the nature of the commercial establishment. The AO treated the factory premise being 'Land & Building' as taxable wealth within the meaning of section 2(ea) of the Act but CIT(A) held, in the given facts, that the factory premise was being used for productive purpose and was in the nature of commercial establishment and therefore it falls under the exception of "any property in the nature of commercial establishments or complexes" as per Exception (5) of clause (i) of section 2(ea) of the Act. Hence he held that such commercial establishment cannot be included in the net wealth of the assessee.
7. The facts emerges are that total area of land consists of 20164 sft out of which area is 10771 sft namely, the factory building, courtyard, electrical substation, labour quarters, office and godown etc. The assessee rented out this premises to M. S. Dalmia & Co Ltd for a rent of Rs 12 lakh per annum and this rent was assessed under the head 'Income from House Property'. From the very reading of Sub-clause (5) it is clear that this covers all those properties which are in the nature of commercial establishment or complex meaning thereby that the property must be in the nature of commercial establishment or complex which in turn indicates that the property must also be actually used for the purpose of any business or trade carried on in those commercial establishments or complexes. We are of the view that this Sub-clause (5), "complexes or establishments" are qualified with an adjective 'commercial'. Establishment or complex, therefore, must be of a commercial in nature. The word 'commercial' means something which is used in or related to, a business or a trade. Commercial means relates to or engaged in or used for commerce or trade. The word 'establishment' means an organization, building, construction, shop, store, concern or corporation. Thus, commercial establishment means some kind of place or building or shop or store where business or trade is carried on. The word "complex" means composite, compounded, multiple, manifold, multi-complex or something composed of or made of many interrelated parts, as for example, a multi-purpose building. Thus, the word 'commercial complex' means the commercial multi-purpose building composed and made of inter-relating parts in contrast to a single commercial establishment. In the case of commercial establishment, it is not necessary that it should be composed of or made of interrelated parts. The Legislature has excluded both commercial establishment as well as commercial complexes from the definition of "asset" for the purpose of chargeability to tax under the Act.
8. Further, the Memorandum explaining the provisions in the Finance No. 2 Bill, 1998, under the head "Incentives proposed under the Wealth-tax Act", it is clarified that wealth- tax is not levied on productive assets. In view of this logic, it is proposed that wealth tax would also not be levied on such residential properties that have been let out for a period of a minimum of three hundred days in a year, and, it is also proposed to exempt commercial establishments and complexes from the ambit of Wealth-tax Act. It is, thus, clear that the Legislature has adopted a logic that wealth-tax is not levied on productive assets, and in view of that logic, it was proposed that wealth-tax would not be levied on such residential property that has been let out for a period of minimum 300 days in a year and to exempt commercial establishments and complexes from the ambit of wealth-tax. Therefore, while construing the meaning to Sub-clauses (4) and (5) inserted by the 9 WTA No.39/K/13 & 9/K/14 Adhar Gupta. AY 2006-07 Finance No. 2 Act, 1998 with effect from 1.4.89. the intention of Legislature is that wealth- tax is not to be levied on productive assets and that is to be kept in mind.
In view of the facts of this case and discussion in view of insertion of Sub-clause (5) as inserted by the Finance No. 2 Act, 1998 with effect from 1.4.89 wealth-tax is not to be levied on productive assets. Hence, in view of reasoning given above, we confirm the order of CIT(A) and dismiss both appeals of revenue."
As the issue is covered, respectfully following the above order of Coordinate bench of this Tribunal, we allow the appeal of assessee.
Now coming to Revenue's appeal in WTA No.09/Kol/2014
5. The only issue in appeal of Revenue is against the order of CWT(A)-XIX, Kolkata in treating the properties of 7A, Taltala Projects, 27, Abdul Halim Road, 4/2 Colin lane, 7/1, Earang Lane and 88, Taltala Road Kolkata are not assets in view of provisions of Sec.2(ea) of the Act. For this, Revenue has raised following ground no.1:-
"1. The Ld CWT erred by treating the assets at 7A,Taltala Projects, 27, Abdul Halim Road, 4/2, Collin Lane, 7/1, Earang Lane and 88, Taltala Road are not in purview of the sec 2(ea) including closing stock of 88, Taltala Road."
6. Brief facts stating that AO treated the following properties asset i.e. forming part of the asset u/s 2(ea) of the Act. Aggrieved, assessee preferred appeal before CWT(A)-XIX, Kolkata who deleted the disallowance by observing in para-5.2 and 5.3, which reproduced as under:-
"5.2 I have considered the factual aspect of the case and taken note of the submissions made by the appellant. In section 2(ea), definitions of assets have been noted. Here is specific exclusion of house for residential or commercial purposes which forms part of stock-in-trade. All the three assets which have been noted above do form part of the stock in trade as they have been acquired for the purpose of construction of flats and sold. In respect of the advance of Rs.50,000/- which is given for 7/1, Serang Lane, Kolkata, fact is that it is only an advance and was received back also as the deal did not materialize. 5.3 I am of the view that the amount of Rs.1,18,57,204/- relating to the properties as noted by the AO including closing stock of 88, Taltala Road, are outside the definition of asset as per section 2(ea) of the Act and accordingly cannot form part of taxable wealth. In respect of the car maintained by the appellant and also the cash, I am not inclined to agree with the contentions raised by the appellant and, accordingly, contention of the appellant in relation to these two asses namely car and cash is not accepted. The AO is directed to recompute the taxable wealth of the appellant and charge the ax accordingly."
Aggrieved, now Revenue is in appeal before the Tribunal.
7. We have heard rival submissions and gone through the facts and circumstances of the case. We find that these assets are commercial purposes which 10 WTA No.39/K/13 & 9/K/14 Adhar Gupta. AY 2006-07 form part of stock-in-trade and these three assets have been noted as part of the stock-in-trade and acquired for the purpose of construction of flats, the nature of business of assessee is purchase and sale of immovable properties the assessee had undertaken construction of premises bearing (a) No. 7, Taltala Lane, Kolkata 27 (b) Abdul Halim Lane, Kolkata and (c) 4/2, Colin Lane, Kolakta. These premises were purchased and the assessee disposed off the flats after construction. Since these are purely business activities relating to purchase and sale of the immovable in which the assessee had indulged, the income arising to the assessee by way of sale of flats in these premises has been shown as income in his return of income as assessed. We find that all the above noted three properties being the business assets which cannot form part of taxable wealth. In view of the above, we are of the view that CWT(A) has rightly treated these assets as stock-in-trade and hence we confirm the same. This appeal of Revenue is dismissed.
8. In the result, appeal of assessee is allowed and that of Revenue is dismissed.
9. Order is pronounced in the open court on 14 August, 2015.
Sd/- Sd/-
(B. P. Jain) 10/08/2015 (Mahavir Singh)
Accountant Member Judicial Member
Dated : 14th August, 2015
*Dkp-P.S
Copy of the order forwarded to:
1. ASSESSEE - Adhar Gupta, C/o S.L.Kochar, Advocate, 86, Canning Street, Kolkata-700 001.
2 Revenue - CWT, Kol-XI, Kol/ITO, Wd-33(3) 10B, Middleton Row, Kolkata-71.
3. The CIT(A), Kolkata
4. CIT Kolkata
5. DR, Kolkata Benches, Kolkata /True Copy, By order, Asstt. Registrar.