COMMISSIONER OF WEALTH TAX Vs. COSMOPOLITAN HOSPITALS P LTD
LAWS(KER)-2003-3-31
HIGH COURT OF KERALA
Decided on March 04,2003

COMMISSIONER OF WEALTH TAX Appellant
VERSUS
Cosmopolitan Hospitals P Ltd Respondents

JUDGEMENT

G.SIVARAJAN, J. - (1.) THE matter arises under the WT Act, 1957 (for short 'the Act').
(2.) THE scope and ambit of Section 40(3)(vi) of the Finance Act, 1983, regarding the computation of net wealth of a closely -held company which was made liable to wealth -tax assessment as per the said Act arises for consideration in these appeals. The CWT, Trivandrum is the appellant in all these appeals. The respondent -assessee is a company in which the public are not substantially interested. It carries on the business of running a hospital at Thiruvananthapuram. The assessment years concerned are 1987 -88, 1988 -89, 1989 -90 and 1990 -91. For the aforesaid 4 assessment years the assessee did not file any return under the Act. The AO, therefore, issued a notice under Section 17 of the Act asking the assessee to file its wealth -tax return for the aforesaid 4 years. Pursuant to the said notice, the assessee filed nil returns. It was claimed before the AO that the assessee is conducting the business of running the hospital and that the building and land used by the assessee for running the hospital are entitled to exemption under the provisions of Section 40(3)(vi) of Finance Act, 1983. It was contended before the AO that the company is not liable to wealth -tax as it is running a hospital in the building owned by it. The assessing authority took the view that the exemption under Clause (vi) is available only in respect of hospitals which are mainly used by a company for the welfare of its employees and since the hospital is not intended nor used for the welfare of its employees, the building and the appurtenant land belonging to the company are liable to be included in the net wealth under the provisions of Section 40(2) r/w 40(3) of the said Act. The assessee took up the matter in appeals before the CIT(A), Thiruvananthapuram, who by a common order dt. 18th Sept., 1995 (Annexure B) dismissed the said appeals holding that exemption was not available to the hospital building even though it was used for the purpose of the assessee's business. The Tribunal, on further appeals by the assessee, by a common order dt. 21st Sept., 1999 (Annexure C) for all the 4 years allowed the appeals holding that the hospital building used by the assessee will fall under the expressions 'office for the purpose of business' as appearing in Clause (vi) for the purpose of exclusion.
(3.) WHILE , admitting these appeals notice was issued on the following two questions : '1. Whether, on the facts and in the circumstances of the case the building used by the assessee -company for running the hospital (and the land appurtenant thereto) qualifies as a building used as 'office for the purpose of the business' envisaged under Section 40(3)(vi) of the Finance Act, 1983, read with the WT Act, 1957 ? 2. Whether, on the facts and in the circumstances of the case, will the building used by the assessee -company for running the hospital and the land appurtenant thereto will come within the exclusion of Section 40(3)(vi) of the Finance Act, 1983 r/w the WT Act, 1957?' ;


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