Wealth Tax not leviable on Commercial Asset which is Capable of being put to Productive Use: ITAT [Read Order]

Wealth Tax - Kerala High Court - Taxscan

The Hyderabad bench of Income Tax Appellate Tribunal (ITAT) in Wealth Tax Officer versus M/s. Chavva Estates Private held that commercial asset which is capable of productive use is not eligible to wealth tax.

In the instant case, the Assessee bought a property along with two company comprising of land and building being a cinema theatre. Pursuant to the notice under section 17, Assessee filed his return of wealth and claimed exemption under section 2(ea)(i)(3) on the ground that asset is a commercial establishment and not chargeable to wealth tax.

The Assessing Officer asked to submit certain document to check the condition of the present asset and in response to the said notice Assessee filed a letter stating that no activity being carried due to some financial and procedural delays.

Since the Assessee failed to produce certain documents such as license issued by local authority, then AO proceeded to compute wealth charge taxable on the asset.

Aggrieved, the assessee preferred an appeal before CIT (A) who allowed appeal favourable to Assessee. Now revenue came with an appeal before this ITAT. This bench comprising judicial member Madhavi Devi and accountant member Rifaur Rahman heard the contention of Assessee that the said property was not active during the assessment year due to renovation into multiplex theatre.

The bench gone through several judgements and found that Assessee along with two group companies own the said property which was not active due to various reasons but that doesn’t mean that the said property lost its character.

Accordingly, the bench concluded that they are satisfied with the nature of the commercial establishment, and the exclusion provided in section 2(ea)(i)(3) would be applicable.

Subscribe Taxscan Premium to view the Judgment
taxscan-loader