Law:

Section:

Section 40 of the Finance Act, 1983 - Wealth tax - Revival of levy of wealth-tax in case of closely held companies - Assessee, a domestic company, was carrying on business of dealing in real estate, construction, selling and letting out buildings on hire - A portion of basement of building was let out to a bank on a long term lease and balance portion was used by assessee as office premises - Income from said lease had been assessed under Income-tax Act, 1961 as 'income from house property - Tribunal held that no part of assets of assessee in form of land and building could be treated as exigible to wealth-tax under section 40 as it was used by assessee as office premises - Whether only that portion of building which was used by assessee as office for purpose of its business was to be exempted under section 40(3)(vi) - Held, yes - Whether, therefore, Tribunal committed grane error by granting relief which was erroneous and against statute - Held, yes FACTS The assessee was a domestic company carrying on business of dealing in real estate, constructing, selling and letting out buildings on hire. The basement portion of the building to an extent was let out to a bank and the balance portion was used by the assessee for its business purpose. Though the assessee had returned the value of the building and land, it contended before the Assessing Officer that in terms of section 40 as a portion of the basement was used by the assessee as office premises, the value of the building could not be assessed for wealth-tax. The Assessing Officer rejected the contention of the assessee on the ground that the substantial portion of the basement had been leased out to the bank on long-term lease. However on appeal, the Tribunal held that no part of the assets of the assessee-company in the form of land and building could be treated as exigible to wealth-tax as it was used by the assessee as office premises and, thus, reversed the assessment order. On reference: HELD In view of section 40(3) all lands other than agricultural lands form part of the taxable wealth and inclusion of the value of lands was perfectly justified. The intention of the Legislature is to be ascertained…

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