- (1.) THE Appellant company carries on the business of running a Hospital at Thiruvananthapuram. The issue arose as to whether the said Hospital property would be subjected to wealth tax under the Wealth Tax Act, 1957 (hereinafter referred to as 'Act'). The assessment years with which we are concerned in this appeal are 1987 -1988, 1988 -1989, 1989 -1990 and 1990 -1991. Invoking the provisions of Section 40 of the Finance Act, 1983 by which the levy of wealth tax in the case of closely -held companies was revived, the assessing officer took the view that on the building where the Appellant -Hospital was carrying on its business activity of running a Hospital would be subjected to the wealth tax inasmuch as Under Sub -section (3) of Section 40, the nomenclature of those assets are mentioned which are to be included for the purposes of assessing the wealth tax and building and land appurtenant thereto is specifically stipulated therein. The Appellant challenged the order by filing appeal before the Commissioner of Income Tax (Appeals) which was dismissed. In further appeal to the Income Tax Appellate Tribunal (hereinafter referred to as 'ITAT'), the Appellant succeeded. However, the order of ITAT has been reversed by the High by the impugned judgment dated 04.03.2003. This is how, in the present appeal, the correctness of the order of the High Court arises for consideration.
(2.) SECTION 40 which is the charging Section clearly mandates that wealth tax shall be charged under the Wealth Tax Act for assessment years commencing on and from the 1st day of April, 1984, in respect of the net wealth on the corresponding valuation date of every company, not being a company in which the public are substantially interested, at the rate of 2 per cent of such net wealth. Thus, excluding those companies in which public has a substantial interest and share holding, assets and wealth of every company is excisable to wealth tax under the aforesaid provision. Sub -section (2) of Section 40 deals with the net wealth of a company on which the wealth tax is to be levied. The assets which are referred to in Sub -section (2) are specifically stipulated in Sub -section (3). As mentioned above, building and land appurtenant thereto are mentioned in those assets. This is so stated in Clause (vi) of Sub -section (3). However, this very clause excludes certain kinds of buildings or parts thereof. The only question is as to whether the building of the Appellant where the aforesaid Hospital is run would fall in that excluded category. In order to answer this question, we reproduce Clause (vi) of Sub -section (3) of Section 40 hereunder: (vi) building or land appurtenant thereto, other than building or part thereof used by the Assessee as factory, godown warehouse, cinema house, hotel or office for the purposes of its business or as a hospital, creche, school, canteen, library, recreational centre, shelter, rest -room or lunch room mainly used for the welfare of its employees or used as residential accommodation, except as provided in Clauses (vi -a) and (vi -b), and the land appurtenant to such building or part; (vi -a) any building used as residential accommodation in the nature of a guest house and land appurtenant thereto; (vi -b) any building and the land appurtenant to such building used as residential accommodation by any director, manager, secretary or any other employee of the Assessee, such employee holding not less than one per cent of the equity share of the Assessee or by any relative of any person who holds not less than one per cent of the equity share of the Assessee. Explanation. -For the purposes of this clause, 'relative' shall have the meaning assigned to it in Explanation 1 to Section 13 of the Income -tax Act. This provision makes it clear that insofar as factory, godown warehouse and hotel are concerned, they are specifically excluded. Likewise residential accommodation for the employees or the accommodation which is run as hospital, creche, school, canteen, library, recreational centre, shelter, rest -room or lunch room mainly for the welfare of its employees and land appurtenant to such building or part thereto is excluded. Any building or part thereto, used by the Assessee as "office for the purposes of its business" also stands excluded. The Appellant wants its case to be covered by the aforesaid category. To put it otherwise, the contention of the Appellant is that the Hospital building should be treated as "office" which is used for the purposes of its business.
(3.) AS mentioned above, the Hospital building is used as a business, viz., for outsiders. The building used for the purpose of hospital by no stretch of imagination can be treated as 'office'.;