Supreme Nonwovens Ltd. vs Assistant Commissioner of Wealth Tax

Heard. Perused appeals.

The present appeals were admitted on the following substantial questions of law:

Whether the Appellate Tribunal is correct on facts and in law in confirming the assessment order treating the factory shed under construction as asset exigible to wealth tax?

Whether the Appellate Tribunal is justified in confirming the action of the Assessing Officer to treat the factory shed under construction as asset exigible to wealth tax?

The Assessing Officer has assessed the factory shed which was claimed to be under-construction and was held exigible to the wealth-tax. The assessee was contending that the premises was used for a commercial purpose as such it was in the exempted category falling u/s 2(ea)(i) of the Wealth-tax Act. The said contention raised by the assessee did not find favour of the Assessing Officer.

Being aggrieved by the aforesaid order, an appeal was carried to the first Appellate Authority viz., Commissioner of Wealth-tax, who was pleased to record his finding in paragraph Nos. 2 and 3 of his order, which read as under:

2.3 I have considered the submissions of the appellant company. The admitted facts arc that during the previous year, the appellant has given on rent the. part of the building for the total annual rent of Rs. 9.00 lakhs. What the appellant has given on rent is only a part of the building, which has been occupied by M/s. Supreme Trevcs Pvt. Ltd. a Joint Venture company promoted by the appellant. The appellant''s contention that the premise given on rent is a factory building is also not correct, as M/s. Supreme Treves Pvt. Ltd. is running its office from the rented premises. Section 2(ea)(i) of the Wealth-tax Act uses the words "any building or lands appurtenant thereto (herein after used referred to as "the house"), whether used for residential or commercial purpose...." Thus, the arguments advanced by the 1d. Counsel for the appellant that the factory building could not be charged to Wealth-tax remained unsubstantiated.

Reading of the aforesaid para would clearly go to show that the finding of fact is recorded by the Commissioner of Wealth-tax that the factory shed was not used for commercial purpose.

Not satisfied with the aforesaid finding of the Commissioner of Wealth-tax, an appeal was carried to the Income Tax Appellate Tribunal (The Tribunal'').

The Tribunal, after hearing the parties, in paragraph No. 8 of its order, has affirmed the findings recorded by the first Appellate Authority in the following words:

We have carefully considered the submissions of both the parties and also thoroughly perused the orders of the authorities below in the light of the material placed before us as well as the case laws cited by 1d. A.R. The admitted facts are that the appellant has rented out a portion of the building to M/s. Supreme Treves Pvt. Ltd. The appellant has also alleged that the said Private Limited company has subsequently became the Joint Venture Company which was promoted by the appellant. However, in support of this contention there is only a format of the agreement, without giving any specific date of execution of the said agreement. It is also not clear whether in fact the said private limited company has became Joint Venture Company of the appellant, as well as from what date the said agreement came into effect. Moreover, there is no dispute about this fact that as on the valuation date i.e., as on 31st March, 1997 there was no such Joint Venture in existence between the appellant as the said private limited company and the only relationship was purely of a landlord and tenant. Due to this reason the appellant has declared the income of the premises leased out under the head ''Rental income'' as per the Income Tax assessment proceedings, the appellant has also not denied this fact. The facts recorded in the Income Tax proceedings have very clearly mentioned that the rental income was not treated as the business income of the appellant.

It is thus clear that a categorical finding of fact is recorded by the Tribunal that the appellant had declared the income of the subject premises under the head ''Rental income'' in the Income Tax Return and the same was assessed accordingly. The said order of assessment is accepted by the present appellant. This finding was recorded notwithstanding the existence of the Joint Venture Agreement sought to be pressed into service.

The original Joint Venture Agreement is produced on record. The said agreement is neither embossed on the stamp paper nor it is notarized, it is on the plain paper. It does not inspire any judicial confidence. The Tribunal has categorically found that the relationship between the appellant and occupant of the premises was purely that of landlord and tenant. The said finding cannot be said to be a perverse finding in the facts and circumstances of the case. Under these circumstances, no substantial question of law is involved.

The reliance placed on the judgment of this Court in the case of Commissioner of Wealth Tax Vs. Cema (P.) Ltd., is misplaced. The said judgment is not applicable to the present case.

In the above view of the matter, both the appeals are devoid of any substance, the same stand dismissed for want of substantial question of law. No order as to costs.