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inspecting Assistant Vs. N. Soorian Pillai - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Madras
Decided On
Judge
Reported in(1983)4ITD385(Mad.)
Appellantinspecting Assistant
RespondentN. Soorian Pillai
Excerpt:
.....year for the purpose of his business being the partnership business, it should be considered to be business premises and exempt from additional wealth-tax. the claim was not allowed by the wto. but on appeal, the commissioner (appeals) allowed the claim on finding that the two conditions required for the property to be considered as business premises were satisfied, namely, that it was owned by the assessee and it was used in his business.3. in these appeals the contention of the revenue is that the two conditions obtaining in the definition of 'business premises' in rule (i) of para b of part i of the schedule to the wealth-tax act, 1957 ('the act') are conjunctive and not disjunctive. it was submitted that as the owner of the premises, the assessee must have used the property in his.....
Judgment:
1. These appeals by the revenue are concerned with the claim of the assessee for exemption from additional wealth-tax.

2. The admitted facts are that the assessee, an individual, is the owner of a land on which some factory sheds, store room, godowns, etc., have been built in Thiruvottiryur. He had let out this property to a firm, Ashok Silicate Industries, in which he is a partner. The income from letting out the property is assessed in his hands as income from house property. The assessee claimed that the property owned by the assessee having been used throughout the previous year for the purpose of his business being the partnership business, it should be considered to be business premises and exempt from additional wealth-tax. The claim was not allowed by the WTO. But on appeal, the Commissioner (Appeals) allowed the claim on finding that the two conditions required for the property to be considered as business premises were satisfied, namely, that it was owned by the assessee and it was used in his business.

3. In these appeals the contention of the revenue is that the two conditions obtaining in the definition of 'business premises' in Rule (i) of Para B of Part I of the Schedule to the Wealth-tax Act, 1957 ('the Act') are conjunctive and not disjunctive. It was submitted that as the owner of the premises, the assessee must have used the property in his own business and since the conditions were not cumulatively satisfied in that manner, the assessee was not entitled to the exemption. It was pointed out that as far as the assessee was concerned, he was deriving income from the property by letting it out and, therefore, the use of the premises in the partnership business was not user as owner but user as a partner in a different capacity and that difference disentitled him from the exemption.

4. We are not able to appreciate the distinction sought to be made by the revenue between the two conditions given in the definition of 'business premises'. The conditions are that the asset should be owned by the assessee and that the asset should be used in the business of the assessee. Admittedly, these two conditions are separately satisfied. But the contention of the revenue is that they should be together satisfied in the sense that the user in the business should be as the owner of the asset. We are unable to see how such a conjunctive construction of the definition is required when there is no underlying object for inferring such an additional condition for granting exemption. Obviously, the intention of Parliament was only to see that assets used as business premises are exempt from the additional wealth-tax and naturally, the exemption will be available only when such an asset is owned by the assessee. The ownership of the asset is only for the purpose of exclusion from the net wealth, whereas the user in the business characterises the nature of asset qualifying for the exemption. Of course, it would be different matter if the asset is used in the business of some one else. But it is not disputed that in this case the assessee being a partner of the firm in whose business the asset is used and the business of the firm being the business of the partner assessee, it cannot be gainsaid that the asset is in fact not used in the business of the assessee. The revenue attempts to make much of the fact that the assessee is also deriving income by letting out the asset to the firm and, therefore, the asset being exploited as owner on the one hand, while claiming that the asset is used in the business of the assessee. We find nothing incongruous or contradictory in the derivation of income by letting out the property to the assessee's own business. We are, therefore, satisfied that the conditions prescribed in the definition of 'business premises' being prima facie satisfied, it is not necessary to import into the definition a further condition that the use in the business should be in the capacity of the owner and not in the capacity of the partner to deny the exemption. Since the exemption is aimed at saving assets used in the business of the assessee from being subjected to additional wealth-tax, it is not possible to twist the meaning of the definition in such a manner as to tax an asset which is prima facie exempt. We have, therefore, no hesitation in confirming the order of the Commissioner (Appeals) on this point.

5. The assessee has filed the cross-objections claiming that the statement of the Commissioner (Appeals) that the valuation of the properties was not contested was incorrect. But as observed by the Supreme Court in the case of ITO v. S.B. Singhar Singh & Sons [1976] 105 ITR 570, the question whether the omission to contest a matter was due to the failure of the assessee to urge that ground or due to a lapse on the part of the appellate authority, which deserves rectification, was a matter entirely for the authority concerned.

Therefore, it is for the assessee to approach the Commissioner (Appeals) if there was an error or omission in dealing with a ground actually pressed before him. It is, therefore, not necessary to decide this issue as it is premature.

6. In the result, all the appeals and the cross-objections are dismissed.


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