Commissioner of Wealth Tax vs Alfred and Berg Co. (I) (P) Ltd.

N. V. Balasubramanian, J.—The Tribunal has stated the case and referred the following question of law u/s 27(1) of the WT Act, 1957 in

relation to the asst. yrs. 1984-85 to 1987-88 of the assessee :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law and had valid materials in holding that the market value of

the rented portion of the building should be excluded from the net wealth of the assessee for the assessment year under consideration ?

The assessee is a company, in which public are not substantially interested. The assessee is engaged in the business of manufacture of

pharmaceuticals. The assessee also owns an immovable property situated at No. 1, Hunters Road, Choolai. It is stated that during the relevant

assessment years in question, the assessee had let out portion of the building to the tenants and realised rental income from the portion of the

building let out to the tenants. The WTO applied Section 40(3)(vi) of the Finance Act, 1983 and held that the let out portion of the building was

assessable to wealth-tax, which was confirmed by the CWT(A). The Tribunal however, noticed the objects of the assessee-company as found in

the memorandum of association and held that letting out portion of the building fell within one of the objects of the company and therefore the

portion let out by the assessee was a business asset and the same was exempt under the provisions of Section 40(3)(vi) of the Finance Act, 1983.

The Revenue has challenged the order of the Tribunal by filing a reference and the Tribunal has stated the case and referred the question of law

stated earlier.

We heard the learned counsel appearing for the Revenue and learned counsel appearing for the assessee.

We have considered a similar question in detail in TC Nos. 102 to 105 of 1998 and by judgment dt. 20th Nov., 2002 we have remitted the

matter to the Tribunal by holding that the presence of the object clause in the memorandum of association is alone not sufficient and the Tribunal

should consider whether the building was a business asset or not with reference to Section 40(3)(vi) of the Finance Act, 1983 and also with

reference to the terms of the lease deed under which the property was let out. In the instant case, the Tribunal except considering the object clause

in the memorandum of association has not considered the terms and conditions of the lease deed under which the building was let out. The Tribunal

also has to consider the terms of Section 40(3)(vi) of Finance Act and then examine the question and even if it is commercial asset, it has to be

considered whether it is excludible from the levy of wealth-tax. We find that there was no proper consideration by the Tribunal and this matter

requires to be remitted to the Tribunal for fresh consideration.

Learned counsel for the assessee has also not seriously disputed that the matter requires remand. Accordingly, without answering the question of

law referred to us, we remit the matter to the Tribunal with a direction to consider the question afresh.

It is made clear that it is open to the parties to let in further evidence before the Tribunal and it is always open to the Tribunal to remit the matter

to the AO for fresh consideration to decide the issue in accordance with law.