Law: Wealth Tax Act, 1957

Section: 4

ORDER 1. In this case we are concerned with wealth tax on a property situated at Plot No.39, Site IV, Sahibabad. The concerned assessment year is 1984-1985. The facts are that the appellant before us is a company which manufactures bed sheets. It contends that it's own subsidiary company namely, M/s Dior International Pvt. Ltd., is a company under the same management and is doing processing work, namely, dyeing, for the assessee company in a part of the factory building situate at the aforesaid property. It is not disputed that M/s Dior International Pvt. Ltd. installed its own machinery for the said job work of dyeing and that the assessee charged a sum of Rs.20,000/- per month as license fee from M/s Dior International Pvt. Ltd. The said sum of Rs.20,000/- per month charged as license fee has been claimed by the assessee to be business income. Further, it is also clear that the job work undertaken by M/s Dior International Pvt. Ltd., though done wholly for the assessee, was nonetheless charged to the assessee's account and paid for by the assessee. The question that arises on the facts in this case is whether under Section 40(3)(vi) of the Finance Act, 1983, "the building" is used by the assessee as a factory for the purpose of its business. Section 40(3) is set out herein below: "The assets referred to in sub-section (2) shall be the following, namely :- (i) gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals (not being any such precious metal or alloy held for use as raw material in industrial production; (ii) precious or semi-precious stones whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel; (iii) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel; (iv) utensils made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals; (v) land other than agricultural land; (Provided that nothing in…

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