At, High Court of Kerala
By, THE HONOURABLE MR. JUSTICE S. SANKARASUBBAN & THE HONOURABLE MR. JUSTIC PIUS C. KURIAKOSE
For the Appellant : P.K.R. Menon (SR) Counsel for IT, George K. George, SC for IT. For the Respondent: P. Balakrishnan (E), R. Amritharaj, Advocates.
These cases arise under the Wealth Tax Act (hereinafter referred to as ‘the act’). The assessment years are 1985-86 and 1986-87. The assessments for these years were completed under Section 16(1) of the Act. Later on, the Commissioner of Wealth Tax revised the assessments under Section 25(2) of the Act. This was challenged before the Income Tax Tribunal. The Income Tax Tribunal set aside the order of the Commissioner of Wealth tax and restored the original assessment. A petition was filed to recall that order as there were some mistakes. It was allowed. Subsequently, the Tribunal heard the appeal again and the Tribunal passed the order in favour of the assessee. Hence, the Revenue has come in appeal.
2. The assessee is conducting business in hosiery and handloom goods. For this purpose, the assessee has got a weaving shed. But Weaving shed was given on rent to the Civil Supplies Corporation and another portion of the building was converted into a Kalyana Mandapam. The Commissioner took the view that the exemption under Section 40 (3) (vi) of the Finance Act 1983 will be available if the assessee uses the building as a factory, godown, warehouse, hotel for the purpose of business. The business of the assessee is manufacture of hosiery and handloom goods. The Assessing Officer exempted the weaving shed on the ground that it is used for its business. The Revisional Authority took the view that unless the building is used as a warehouse or a godown exemption cannot be granted. The Tribunal now takes the view that in the income tax proceedings the rent from the Civil Supplies Corporation and Kalyana Mandapam was treated as the business income and hence, for the purpose of wealth tax also, it can be termed as business premises coming under Section 40 (3) (vi) of the Finance Act.
3. In the appeal, the following questions of law raised:
(1) “Whether on the facts and in the circumstances of the case the Tribunal is right in law in holding that the assessee’s case is hit by section 40 of the Finance Act, 1983?
(2) Whether, on the facts and in the circumstances of the case the Tribunal is right in law and fact in relying on the finding of the High Court in the income tax case of the assessee that this is the business income and is not the approach and reliance on the finding in the wealth tax case wrong unwarranted and vitiated?”
A Division Bench of this Court in Commissioner of Wealth-Tax v. Cosmopolitan Hospitals (P) Ltd. 265 I.T.R. 312, held that Section 40(3)(vi) of the Finance Act specifically includes warehouse, cinema house, hotel or office or the purpose of its business or as residential accommodation for its employees. It also provides for exclusion of buildings or part thereof used as a hospital, creche, school, canteen library, recreational center, shelter, rest room, etc. According to us, the Tribunal was not correct in holding that the warehouse buildings has to be excluded from the Wealth Tax provisions. It may be true that the income from the business conducted in the buildings was treated as the business income. But what we have to find out is whether under the relevant provisions of the Wealth Tax Act, this can be applied. Since in these cases, the building is not used for the purpose of business, it cannot be exempted. Hence, according to us, the Commissioner of Wealth Tax was correct in directing the market value of the warehouse and the building where the Kalyana Mandapam is functioning should be included in the taxable wealth of the assessee. Learned counsel for the respondent then took the contention that the second order of the Tribunal dated 18.10.2000 is barred by limitation. According to the counsel, under Section 35(7) of the Act, no amendment under this action shall be made after the expiry of four years. The first order is dated 23.12.1994. Petition to recall was filed on 6
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.5.1997, i.e., within two years and six months. The second order is dated 18.10.2000. We agree with the learned counsel for the Revenue that the time taken by the Tribunal to pass orders cannot be taken into consideration. The application was filed within four years. Hence, the order is not hit by Section 35(7) of the Act. In the above view of the matter, the order passed by the Tribunal is set aside. Appeals are allowed.