1. to 8. [These paras are not reproduced here as they involve minor issues.] 9. The last ground in these appeals relates to additional wealth-tax liability under paragraph A(2) to Schedule I to the Wealth-tax Act, 1957 ('the Act'). The assessee contended that the entire property at 15, Barakhamba Road, New Delhi, on which the multi-storey flats were being constructed should be treated as business premises of the assessee in order to get the exemption from additional wealth-tax levy.
This has been rejected by both the authorities below and this ground is pressed before us.
(2) In addition, in the case of every individual and Hindu undivided family, where the net wealth of the individual or Hindu undivided family includes the value of any asset, being building or land (other than business premises) or any right in such building or land, situated in an urban area (such asset being hereafter in this Part referred to as urban asset).
(i) 'business premises' means any building or land or part of such building or land or any right in building or land or part thereof, owned by the assessee and used throughout the previous year for the purposes of his business or profession and includes any building used for the purpose of residence of persons employed in the business or any building used for the welfare of such persons as a hospital, creche, school, canteen, library, recreational centre, shelter, rest-room or lunch-room, but does not include any premises in the nature of a guest house ; Mr. Unni for the assessee very seriously contended that the entire multistorey building, which consists of flats and which are stock-in-trade of the assessee must be treated as business premises and, therefore, no additional wealth-tax is liable in respect of the value of that property. He has further pointed out that since business premises is any building or land owned by the assessee and used for the purpose of business, the value of the entire building is not attracted for levy of additional wealth-tax.
11. We are unable to agree with the submissions of Mr. Unni. It is true that the land is exploited by the partnership firm in which the assessee is a partner and his interest is worked out in the partnership firm. But one cannot say that the entire building can be treated as business premises of the assessee. At this stage a little clarification is necessary as to how the assessee is claiming the particular benefit.
The assessee is a partner in the firm known" as Hansalaya properties.
The business of the partnership firm is to exploit land which has been brought into the partnership fold by constructing multi-storey flats.
For the purpose of wealth-tax, the assessee's interest in the partnership firm is worked out and in so working out the value of the property which is being exploited by the partnership firm was determined. The value of such interest is included in the wealth of the assessee. The assessee is, therefore, claiming that in respect of his share of interest in the partnership firm, which consists of the property, should not be subjected to additional wealth-tax liability on the ground mentioned earlier.
The expression 'business premises' must be understood in the sense of the place where the business of the partnership firm is being carried on. Whenever it is said that a partnership firm is carrying on business, it is samething as partners carrying on the business. The entire building, which consists of several flats, cannot be treated as business premises of the partnership firm. The flats are stock-in-trade of the partnership firm and by no stretch of imagination the entire building can be treated as business premises in order to escape the liability for additional wealth-tax. The definition of business premises also does not take the assessee's case any further. The whole concept is that the premises or the places of business must be understood as the place in which the business is carried on by an assessee. What the Legislature meant was that the land and building must be used for the purpose of business. Mr. Unni tried to rely on those line of cases which have dealt with the meaning of 'for the purpose of business'. But those line of cases, which have no doubt taken a wider meaning of the expression 'for the purpose of business', have no relevance in understanding the meaning of the expression 'business premises'. It is difficult to accept that the entire building is used for the purpose of business. Only a small portion if at all can come under the expression 'business premises'. However wide the meaning of the word 'for the purpose of business' may be, it is not possible to accept that the assessee is using the entire building consisting of several flats for the purpose of business. The expression 'business premises' must be given a rational meaning in holding that it is a place of business or in other words a place where the assessee is carrying on business. Suppose the assessee is exploiting lands at different places by constructing several buildings. All such buildings cannot be treated as business premises. We are, therefore, unable to accept the contention of Mr. Unni.
12. Mr. Unni alternatively contended that the portion which is actually used for the purpose of business should be exempt. There is some force in this contention. Since, however, this question has been taken up for the first time, interests of justice would be served by directing the WTO to earmark that portion of the building, which is actually used for the purpose of carrying on business by the assessee and the value of that portion would then be not liable to additional wealth-tax.
13. Mr. Unni also contended on the basis of Rule 2 that the liabilities should also be deducted and it seems there are some liabilities. This also the WTO is directed to look into. For the aforesaid two purposes also, the matter is remitted to the WTO.14. & 15. [These paras are not reproduced here as they involve minor issues.]