A. PAPER PRESENTED BY ANUP A. MOHABANSI AT CEP NAGPUR , AUG. 2004
1. Assets
The expression "Assets"
has been defined by Section 2(e) for the assessment
up to 1992-93. However, from the Assessment
Year 1993-94, the expression "Assets" has been
defined by a new sub clause (e a) of Section 2
of the Wealth Tax Act. For the sake of
convenience, the definition as given in the said
section is reproduced below:
"Section
2(ea), "assets", in relation to the assessment
year commencing on the 1st day of April, 1993, or any subsequent
assessment year till the A.Y. 1996-97 means-
(i) any gust house and
any residential house including a farmhouse situated
within twenty-five kilometers form the local
limits of any municipality (whether known as a
municipality, municipal corporation, notified
area committee, town area committee, town committee
or by any other name or a cantonment board), but does not
include - (a) a house meant exclusively for residential
purposes and which is allotted by a company to an
employee or an officer or a director who is in
whole-time employment, having a gross annual
salary of less than tow lakh rupees; (b) any
house for residential purposes which forms part
of stock-in-trade;
(ii) motor cars (other
than those used by the assessee in the business of
running them on hire or as stock-in-trade):
(iii) jewellery, bullion,
furniture, utensils or any other article made
wholly or partly of gold, silver, platinum or
any other precious metal or any alloy containing
one or more of such precious metals:
Provided that where
any of the said assets is used by the assessee as
stock-in-trade, such assets shall be deemed as
excluded from the assets specified in this
sub-clause;
(iv) yachts, boats and
aircrafts (other than those used by the assessee for
commercial purposes);
(v) urban land:
(vi) cash in hand in
excess of fifty thousand rupees, of individuals and
Hindu undivided families and in the case of
other persons any amount not recorded in the
books of account.
Explanation. -
For the purposes of this clause - (a) "jewellery"
includes - (i) ornaments made of gold, silver, platinum
or any other precious metals, or any alloy
containing one or more of such precious stones,
and whether or not worked or sewn into any
wearing apparel; (ii) precious or semi-precious
stones, whether or not set in any furniture, utensils or
other article or worked or sewn into any wering apparel;
(b) "Urban land
" means land situated -(i) in any area which
is comprised within the jurisdiction of a municipality
(whether known as a municipality, municipal
corporation, notified area committee, town area
committee, town committee, or by any other name
or a cantonment board) and which has a
population of not less than ten thousand according to the
last preceding census of which the relevant figures have
been published before the valuation date; or (ii) in
any area within such distance, not being more
than eight kilometers from the local limits of
any municipality or cantonment board referred to
in sub-clause (i), as the Central Government
may, having regard to the extent of, and scope for, urbanization
of that area and other relevant consideration, specify
in this behalf by notification in the Officials
Gazette, but does not include land on which
construction of a building is not include
permissible under any law for the time being in
force in the area in which such land is situated or the
land occupied by any building which has been constructed
with the approval of the appropriate authority or any
unused land held by the assessee for industrial
purposes for a period of tow years from the date
of its acquisition by him (or any land held by
the assessee as stock -in -trade for a period of
five years (from the A.Y. 1995-96) from the
date of its acquisition by him.;
Thus, broadly speaking,
the six types of assets alone are liable to wealth
tax and not any other assets from the Assessment
Year 1993-94 under the Wealth Tax Act: (i)
Guest house /farmhouse and a residential house
subject to certain condition; (ii) Motor cars; (iii)
Jewellery, bullion, etc.; (iv) Yachts, boats and aircraft;
(v) Urban land; and (vi) Cash in had.
The taxability of above
assets to wealth tax is also subject to certain
condition given in the definition of assets. It
is, therefore, clear that items of wealth, like
bank fixed deposits, units, shares, commercial
assets, etc. are not liable to wealth tax as
they are not included in the expression "assets".
The Finance (No. 2)
Act, 1996 had amended the definition of the expression
"assets" in Section 2(ea). Sub clause (i) of
Section 2(ea) has been substituted with effect
with effect from the assessment year 1997-98 by
the the following sub-clause: -
New Sub -clause
(i) of section 2(ea): "any building or land appurtenant
thereto (hereinafter referred to as "house"),
whether used for residential or commercial purposes
or for the purpose of maintaining a gust-house
or otherwise including a farmhouse situated
within twenty-five kilometers from local limits
of any municipality (whether known ass municipality,
municipal corporation or by any other name) or a cantonment
board, but dose not include -(1) a house meant
exclusively for residential purposes and which
is allotted by a company to an employment,
having a gross annual salary of less than two
lakh rupees; (2) any house for residential or commercial
purposes which forms part of stock-trade; (3) any house
which the assessee may occupy for the purposes of any
business or profession carried on by him."
Thus, the most important
amendment which should be noted by the taxpayers
is that if any commercial house property is let
out, it will no longer be regarded as a
commercial property is let out out, it will no
longer be regarded as a commercial property I
exempt from wealth-tax from the A.Y. 1997-98. Thus, any
house (Whether residential or commercial) which the assessee
may occupy for the purposes of any business or
profession carried on by him would be exempt
from wealth-tax from the A.Y. 1997-98. and not
every commercial house or flat.
The Finance (No2) Act,
1998 has drastically amended the definition of
"assets" as appearing in Section 2(ea) w.e.f.
a.y. 1999-2000. Sub-clasue: - (i) of Section
2(ea) has been substituted by the following
sub-clause: -
"New Sub-clause (i) Section 2(ea)"
Any building or land
appurtenant thereto (hereinafter referred to as
"house"), whether used for residential or
commercial purposes or for the purpose of
maintaining a gust house or otherwise including a
farm house situated within twenty-five kilometers from
local limits of any municipality (whether known as Municipality,
Municipal Corporation or by any other name) or a
Cantonment Board, but does not include-
(1) a house meant
exclusively for residential purposes and which
is allotted by a company to an employee or an
officer or a director who is in whole-time
employment, having a gross annual salary of less than five
lakh rupees;
(2) any house for residential or commercial purposes which froms part of stock-in-trade;
(3) any house which
the assessee may occupy for the purposes of any
business or profession carried on by him;
(4) any residential
property that has been let-out for a minimum period of
three hundred days in the previous year;
(5) any property in the nature of commercial establishments or complexes;"
The Finance act, 1999
has, from the a.y.2000-2001 inserted Explanation 2 in
Section 2 (ea) to provide that "jewellery" does
not include the Gold Deposit Bonds.
2. Building
A building could be
residential, commercial, industrial or it may simply
represent a building or structure of a
farmhouse. A residential, commercial or
industrial building which the assessee may occupy for
the purposes of any business or profession carried on by
him is completely exempt from tax. A residential building
with some exceptions is liable to wealth tax as
a part of the "assets" as explained under the
heading ASSETS. With effect from the case of an
individual or HUF.
3. Building: Factory
This is an item of wealth,
which is outside the definition of "Assets"
as per Section 2 (ea) of Wealth Tax Act, 1957. It is
not regarded as non-productive asset from the
Assessment Year 1993-94 and is, therefore,
completely outside the purview of wealth tax. It
is thus completely exempt from wealth tax
without any monetary limit.
4. Bullion
This item of wealth
is considered as a part of "Assets" within the
meaning of Section 2 (ea) of the Wealth Tax Act, 1957
from the Assessment Year 1993-94. Thus, this
item of wealth is considered as a non-productive
asset and is made liable to wealth tax.
However, this item of wealth (other than
stock-in -trade) along with other non-productive assets
is liable to wealth tax only if the total value as on the
valuation date exceeds the exception limit of Rs. 15
lakh. Thus, if the value of this item of wealth
along with other non-productive assets amount
within not be liable to any wealth tax even on
such non-productive assets.
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5. Car
From A.Y. 1993-94, car
is considered as a part of ASSETS WITHIN THE MEANING
OF section 2 (ea) of the Wealth Tax Act, 1957.
Thus, this item of wealth (other than those used
by the assessee in the business of running them
on hire or as stock-in-trade) is considered as a
non-productive asses and is made liable to
wealth tax. However, along with other non-productive
assets is liable to wealth tax only if the total value as
on the valuation date exceeds the exemption limit of Rs.
15 lakh. If the value of item of wealth along
with other non-productive assets comes within
Rs. 15 lakh as on the valuation date, the
taxpayer would not be liable to any wealth tax
even on such non-productive assets.
If, however, cars are
held by a person as stock-in-trade or for hiring,
than the cars are not considered to be liable to
to wealth tax and are excluded from the taxable
"Assets".
6. Car (personal)
A personal car is liable
to wealth tax as part of taxable "Assets" if
the values on the valuation date of all the items of
taxable items of wealth exceeds Rs. 15 lakh. For
example, Mr. 'A' has only one Mercedez car
valuing Rs. 20 lakh which is used by him as a
personal car. He has no other taxable wealth. He
would be liable to wealth tax in respect of the one Mercedez
car on Rs. 5 lakh (Rs. 20 lakh- Rs. 15 lakh) @ 1%, I.e.,
wealth tax payable by him would be Rs. 5,000.
7. Cash in Hand
Cash in hand constitutes
a taxable a taxable item o wealth and is a part of
"Assets " within the meaning of Section 2(ea)
of Wealth Tax Act, 1957 from the Assessment Year
1993-94. However, it is only in excess of Rs.
50,000 in the case of individuals and Hindu
undivided families that cash in hand on the valuation
date is made liable to wealth tax. Thus, if cash in hand
in the case of individuals and Hindu undivided families
is less than Rs. 50,000 than it is not liable to
wealth tax at all. In the case of other persons
including companies any amount of cash in hand
which is not recorded in the books of account is
liable to wealth tax and is part of the
expression "Assets". However, where the value of
non-productive assets including cash in hand not
recorded in books of account of an assessee exceeds Rs.
15 lakh, than only the excess amount of assets would be
liable to wealth tax from the Assessment Year 1993-94
8. Change of Land Use
Sometimes an agricultural
land may be required to be changed to industrial
land or commercial land. In such a case the
necessary formalities as per the laws of the
relevant State have to be complied with. From
the point of view of the incidence of wealth
tax, it should be remembered that change of land use to
industrial land, or an agricultural land to industrial land
results in complete exemption of the industrial land
from wealth tax, provided the industry is set
up within 2 years from the grant of the change
of land use. Similarly, where a taxpayer holds
open land as stock-in-trade, he can hold the
same only for a period of 5 years from the date of its
acquisition with change of of land use by him for the A.Y.
1998-99. This is as per the Explanation to Section 2
(ea) of Wealth Tax Act. Dealing with the
definition of the expression "Assets" as amended
by the Finance Act, 1994, with effect from the
Assessment Year 1995-96. The Finance (No. 2 )
Act, 1998 provides that a person can hold open
land as stock-in -trade for a period of 10 years.
9. Charge of Wealth Tax
The charge of wealth
tax for the assessment years up to 1992-93 is as per
the rates of wealth tax given in Schedule I.
However, for the Assessment Year commencing on
and fromv1993-94 as per Section 3(2) there is
one uniform rate of wealth tax, i.e. 1% on net
wealth (namely non-productive assets as specified in
the Wealth Tax Act ) in excess of Rs. 15 LAKH IN THE CASE
OF INDIVIDUALS, Hindu undivided family and companies
only.
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10. Charitable and Religious Trusts
See TRUSTS CHARITABLE AND RELIGIOUS.
Chief Commissioner
The Chief Commissioner
for the purpose of income tax is also treated as the
Chief Commissioner for the purpose of wealth
tax. The Chief Commissioner is generally the
Chief Administrator of Income Tax & other
direct taxes for particulars charge or charges as
may be notified by the Central Government from time to time
The Chief Commissioner also enjoys the powers to reduce
or waive penalty or interest under Section 18 B
and 31. He also enjoys powers to compound an
offence as per Section 35-I (2). He can also
take evidence of an assessee on oath as per
Section 37 (1). The Chief Commissioner has the power
to search and seizure under Section 37 A and to requisition
books of account under Section 37 B. It is also
provided in Section 35 I (1) of the Wealth Tax
Act that the prosecution has to be at the
instance of Chief Commissioner. Where there is
no Chief Commissioner the powers of Chief Commissioner
are enjoyed by the Commissioner, as may be notified.
11. Clubbing of Wealth
The provisions for clubbing
the wealth of one person in the hands of
another are contained in Section 4 of the Wealth
Tax Act. It is provided in Section 4 (1) (a)
that in computing the net wealth of an individual,
the value of assets on the valuation date held by the following
persons are to be included, as belonging to that
person:
(i) by the spouse of
such individual to whom they have been gifted, i.e.,
the spouse of the individual to whom such assets
have been transferred by individual to directly
or indirectly otherwise than for adequate
consideration or in connection with an agreement
to live apart,
(ii) by a minor child not being a married daughter of such individual,
(iii) by a person or
association of persons to whom such assets have been
transferred by the individual directly or
indirectly otherwise than for adequate
consideration for the immediate or deferred
benefit of the individual and his or her spouse,
(iv) by a person or
association of person to whom such assets have been
transferred by the individual otherwise than
under an irrevocable transfer,
(v) by the son's
wife (i.e., daughter-in-law) of such individual to whom
such assets have been gifted, i.e., to whom such
assets have been transferred by the individual
directly or indirectly on or after 1.6.1973
otherwise than for adequate consideration, and
(vi) by a person or
association of persons to whom such assets have been
transferred by the individual directly or
indirectly on or after 1.6.1973, otherwise than
for adequate consideration for the immediate or
deferred benefit of the son's wife (i.e., daughter-in
-law) of such individual or both.
It is also provided
in the section that this clubbing provision is applied
whether the assets are held in the form in
which they were transferred or otherwise. Assets
are held in the form in which they were
transferred or otherwise. Where a minor child acquires
assets out of this income referred to in proviso to Section
64 (IA) OF THE Income Tax Act, namely, by exercise of
his manual labour or by exercise of his skill,
knowledge and experience than the clubbing
provision would not apply in respect of the
value of such assets.
As regards, the clubbing
provision applicable in the case of wealth of a
minor child, it is provided that the same is to
be included in computing the net wealth of the
father or mother, whose net wealth (including
the assets of the minor so includible) is greater.
Where the marriage of the parents not subsist the clubbing
of the minor's wealth is to be done in the net wealth
of that parent who maintains the child in the
previous year. Normally, where any such assets
are once included in the net wealth of any of
the parent in the succeeding year unless the
Assessing Officer is satisfied after giving the parent
an opportunity of being heard that it is necessary so to
do. Section 4 (1) (b) of the Wealth Tax Act provides
that in computing the wealth of an assessee who
is a partner in a firm or a member of an
association of persons, i.e., AOP (not being a
Cooperative Housing Society), the value of his
interest in the assets of the firm or AOP ascertained
in the manner laid down in Schedule III to the Wealth Tax
At, 1957 would be included as belonging to the assessee.
Where a minor is admitted to the minor as per
the provisions mentioned above. The Finance Act,
1994 has amended Section 4(1) (a) (ii) with
effect from the Assessment Year 1995-96 that the
wealth of a minor child who is suffering from any
disability as is mentioned in Section 80-U of the I.T. Act.,
1961 will not be so clubbed.
As regards the conversion
of the individual property into the hotchpotch
of Hindu undivided family, by an individual
after 31.12.69, the provisions of clubbing of
wealth of such converted assets are contained in
Section 4(1A) of the Wealth Tax Act. It is also mentioned
in Section 4(5) that the value of any assets transferred
under an irrevocable transfer would be liable for
inclusion in computing the net wealth of the
transfer as and when the power to revoke arises
to him.
Regarding the gift
of money by book entries, the provisions of clubbing
are mentioned in Section 4 (5A) which provides
that where a gift of money from one person to
another is made by means of entries in the books
of account maintained by a person making the
gift or by an individual or Hindu undivided family
or a firm or an association or body of individuals with
whom or with which he has business or other relationship,
the value of such gift would be liable to be unless
he proves to the satisfaction of the Assessing
Officer that the money has actually been
delivered to other person at the time the
entries were made. As regards the assessee who is a
member of an Association of Persons, being a Cooperative
Housing Society, the rules of clubbing, etc., and the
deemed ownership are contained in Section 4 (7).
Thus, it is provided that where an assessee is a
member of AOP being a Cooperative Housing
Society and a building or a part thereof is allotted
or leased to him under a house building society, the assessee
would be deemed to be the owner of such building or
part, and value of such building or part would
be included in computing the net wealth of the
assessee. However, in determining the value of
such building or part, the value of any outstanding
instalment of the amount payable under such scheme by the
assessee to the society towards the cost of land, building
or part and land appurtenant thereto shall,
where the amount payable is described as such in
any other manner, be deducted as debt owed by
him in relation to such building or a Section 4
provides that the expression "Transfer" include
any disposition, settlement, trust, covenant, agreement
or arrangement.
12. Commercial Flats and Offices
This is an item of
wealth which is outside the definition of "Assets"
as per Section 2 (ea) of the Wealth Tax Act, 1957.
From the A Assessment Year 1993-94 till 1996-97
it is not regarded as nonproductive asset and
is, therefore, completely exempt from wealth tax
without any monetary limit. However, for the
A.Y. 1997- 98 and A.Y. 1998-99 it would be so exempt
only if it is occupied for the purposes of any business
or profession carried on by him. The Finance (No.2) would
be completely exempt from wealth tax without any
condition of its use by the owner.
13. Commercial Freehold Property
This is an item of wealth
which is outside the definition of "Assets"
as pr Section 2(e a) of Wealth Tax Act, 1957. From
the Assessment Year 1993-94 it is not regarded
as non-productive asset and is, therefore,
completely outside the purview of wealth tax. It
is thus completely exempt from wealth tax without
any monetary limit provided the same is occupied for the
purposes of any business or profession carried on by him
for the A.Y. 1997-98 w.e.f. the A.Y. 1997-98 and
A.Y. 1999-2000 these assets would be completely
exempt from wealth tax without any condition of
its use by the owner.
14. Commercial Land
This is an item of wealth
which is outside the definition of "Assets"
as per Section 2 (ea) of the wealth Tax Act, 1957,
being regarded as non-productive asset and from
the Assessment Year 1993-94 completely exempt
from wealth tax without any monetary limit.
15. Commercial Leasehold Property
This is an item of wealth
which is outside the definition of "Assets"
as per Section 2 (e a) of the Wealth Tax Act, 1957.
From the Assessment Year 1993-94 it is not
regarded as non-productive asset and is
therefore completely exempt from wealth tax
without any monetary limit provided it is occupied for one's
own business or profession for the A.Y. 1997-98 and
A.Y.1998-99. The Finance (No. 2) Act, 1998
provides that w.e.f. A.Y. 1999-2000 these assets
would be completely exempt from wealth tax
without any condition of its use by the owner.
16. Commercial Property
This is an item wealth
which is outside the definition of "Assets"
as per Section 2 (ea) of the Wealth Tax Act, 1957. From
the Assessment Year 1993-94 it is not regarded
as non-productive asset, and is therefore
completely exempt from wealth tax without any
monetary limit provided its occupied for one's
own business or profession for the A.Y. 1997-98 and A.Y.
1998-99. The Finance (No.2) Act, 1998 provides that w.e.f.
the A.Y. 1999-2000 these assets would be completely
exempt from wealth tax without an condition of
its use by the owner.
17. Commissioner
Commissioner or
Commissioner of wealth tax has the same meaning
as is assigned to the expression Commissioner of
Income Tax under Section 2(16) of the Income
Tax Act. He enjoys several powers under the
Wealth Tax Act, including the power to transfer the cases
and to make enquiries in certain matters. He also enjoys
power to reduce or waive penalty or the interest
under Section 18 B of the Wealth Tax Act. He can
also exercise the powers to revise order of
subordinate authority, if he considers the same
as prejudicial to revenue under Section 25. He
can also take evidence on oath under Section 37(1) and compound
offences as per Section 35 I(2). In addition he can
authorize a search and seizure as per the
provisions contained in Section 37A. The
Commissioner also enjoys the power to requisition
books of account in certain cases as per Section 37B. A
prosecution of an assessee for offence under the Wealth
Tax Act to be launched under Section 35I (1). A new
post of Additional Commissioner has been
created.
The Commissioner has
the powers to hear the powers to hear the 'Revision
Petitions' filed by the assessee. However, the
Finance (No.2) Act, 1998 provides that in
respect of the "Revision Petitions" the
Commissioner shall pass an order within one year
from the end of the financial year in which such
application is made by the assessee for revision.
18. Companies
A company is treated
as an assessee under the Wealth Tax Act from the
Assessment Year 1993-94 like an individual or an
HUF. The definition of company as per Section
2(17) of the Income Tax Act is the same for Act.
Under the purpose the provisions of Section
2(17) of the Income Tax Act "Company" means:
(i) Any Indian Company ;or
(ii) Anybody corporate
incorporated by or under the laws of a country
outside India; or
(iii) Any institution,
association or body which is or was assessable or
was assessed as a company for any assessment
year under the old Indian Income Tax Act, 1922
or which is or was assessable or was assessed
under the Income Act, 1961 as a company for any
assessment year commencing on or before 1.4.1970; or
(iv) Any institution,
association or body, whether incorporated or not and
whether Indian or non-Indian which is declared
by general or special order of the Central Board
of Direct Taxes to be a company.
However, it is provided
that such institution, association or body shall be
deemed to be a company only for such assessment
year or assessment years, as may be specified
in the declaration.
Thus the definition
of a company is very relevant since of the 3 main
entities liable to wealth tax under the Wealth
Tax Act, company is an important category of
assessees. Companies registered under Section 25
of the Companies Act, are exempt from payment
of wealth tax the provisions of Section 45 (f).
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19. Cooperative Housing Society
If an assessee is member
of a Cooperative Housing Society and a building or
part thereof is allotted or leased to him under
housing building scheme of the society, as per
provisions of Section 4(7) of Wealth Tax Act, he
would be deemed to be the owner of the such
building or part. The value of such building or
part would be included in computing the net wealth of the
assessee, provided such item of wealth is considered a
non-productive asset. For example, if the
assessee is owner of only one such flat or house
leased by the Cooperative Housing Society, then
the value of the such house would be completely exempt
from wealth tax from the Assessment Year 1994-95.
As regards the tax
liability on the Cooperative Housing Society, it may be
mentioned here that Section 45(g) of the Wealth
Tax Act, 1957 stipulates that it is not
applicable to any Cooperative Society.
20. Factory Building
See BUILDING: FACTORY
Factory land
See LAND: FACTORY
FARM: Vegetable
Investment in a vegetable
farm normally constitutes agricultlural land.
However, with effect from Assessment Year
1993-94 if the farm is situated in an area which
is known as 'urban land ' as per the definition
given in Section 2 (e a) of the Wealth Tax Act
as explained in detail under the heading ASSETS
the value of the farm would be included in the taxable net
wealth of the assessee concerned. If, however, the vegetable
farm is situated outside the municipal limits,
etc. in such a manner that it dose not
constitute urban land, it is absolutely exempt
from wealth Tax Act without any monetary limit.
21. Farmhouse
From the Assessment
Year 1993-94 a farmhouse situated within 25 Kilometers
from the local the limits of any municipality
(whether known as Municipal Corporation,
Notified Area Committee, Town Area Committee,
Town Committee or by any other name) or a
Cantonment Board is liable to wealth tax. The only exception
in such a case is where a farmhouse forms part of the
stock-in-trade of the assessee, then it is not
liable to wealth tax. The other exception could
be a farmhouse which is exclusively meant for
residential purposes and which is allotted by a
company to an employee or an officer or a director who
is in whole time employment having gross annual salary of
less than Rs. 2 lakh then it would not be considered to
be liable to wealth tax. This item of wealth is
normally considered as a part of "Assets"
within the meaning of Section 2(ea) of the
Wealth Tax Act, 1957 from the Assessment Year
1993-94 this item of wealth is considered as
non-productive asset and is made liable to wealth tax.
However this item of wealth along with other non-productive
assets is liable to wealth tax only if total value
value as on the valuation date exceeds the
exemption limit of Rs. 15 lakh. Thus, if the
value of this item of wealth along with other
non-productive assets come within Rs. 15 lakh as
on the valuation date, then the taxpayer would not be
liable to any wealth tax even on such non-productive assets.
22. Farming: Cooperative
If an assessee is a
member of Cooperative Farming Society, he would not be
demand to be considered as the owner. The share
in the Cooperative Farming Society is considered
as an item of wealth which is a productive
asset and is totally exempt from wealth tax
without any monetary limit.
23. Farming: Fish
This is an item of wealth
which is outside the definition of "Assets"
as per Section 2 (ea) of the wealth tax Act, 1957.
Form the Assessment Year 1993-94 it is not
regarded as non-productive asset and is,
therefore, completely outside the purview of
wealth tax. It is completely exempt from wealth tax without
any monetary limit.
24. Farming: Poultry
The normal tools,
implements, building and the lands used for
poultry farming and the poultry chicken, eggs,
etc. do not constitute taxable wealth of an
assessee. This is because these are outside the ambit
of "Assets" which along are liable to wealth
tax have been described in detail under the heading ASSETS.
Thus, if any of the assets or item of wealth of the owner
of a poultry farm comprises of assets like
farmhouse, guest house, or a motor car or
personal boat, yacht, aircraft or jewellery then
certainly those item of assets would be liable
to wealth tax. Thus what ever assets are purely for
poultry farming would not be liable to wealth tax.
25.Farmland
Farmland, generally
considered to be agricultural land, was outside the
levy of wealth tax till the Assessment Year
1992-93. However, from the Assessment Year
1993-94 even farmland is liable to wealth tax if
it is included in the definition of the
expression "Urban Land". Where a farmland is
outside the jurisdiction of a municipality or cantonment
board and has a population of not less than 10,000 or outside
a distance being more than 8 kms from the local
limits of a municipality which has been notified
in the Official Gazette, then it is not
considered as urban land and would be considered
as exempt from tax. However, farmland which is included
within the jurisdiction of a municipality, etc., would be
liable to wealth tax within the overall limit of
Rs.15 lakh for the taxable net wealth. If the
other taxable assets exceeds Rs. 15 lakh, it
would be liable to wealth tax @ 1%.
26. FVNR Bank Account
This is am item of wealth
which is outside the definition of "Assets"
as per Section 2 (e a) of the Wealth Tax Act, 1957.
Thus this item of wealth is completely exempt
from wealth tax without any monetary limit.
27. Fixed Deposit with Banks and Cooperative Banks
This is an item of wealth
which is outside the definition of "Assets"
as per Section 2 (e a) of the Wealth Tax Act, 1957.
Thus, this item of wealth from the Assessment
Year 1993-94 is completely exempt from wealth
tax without any monetary limit.
28. Fixed Income Schemes of Banks, etc.
This is an item of wealth
which is outside the definition of "Assets"
as per Section 2 (ea) of the Wealth Tax Act, 1957.
Thus this item of wealth from the Assessment
Year 1993-94 is not regarded as non-productive
asset and is completely exempt from wealth tax
without any monetary limit.
29. Flats and Apartments: Ownership
Ownership flats and
apartments which are used for commercial or industrial
purposes are completely exempt from wealth tax.
Where an ownership flat or apartment is used by
the assessee being an individual or a HUF for
residence either of the assessee and his family,
then one such flat or apartment or house would be completely
exempt from wealth tax under Section 5(1) (vi) of the
Wealth Tax Act from the Assessment Year 1994-95.
As regards a company ownership flat and
apartment allotted by a company to an employee,
officer or a director who is in whole time of
employment having a gross annual salary of less than Rs
2 lakh would not be considered to be taxable. Thus an ownership
flat or apartment owned by a company and used
for residential purpose by an employee or a
company and used for residential purpose by an
employee or a director drawing salary of more
than Rs. 2 lakh would be liable to wealth tax from the Assessment
Year 1993-94 From the A.Y. 1999-2000 as per the
amendment by the Finance (No.2 ) Act, 1998 the
company ownership flat and apartment allotted by
a company to an employee, etc., would be exempt
from wealth tax if the employee is having gross
salary of less than Rs. 5 lakh. Similarly, from the
A.Y. 1999-2000 the flats and apartments without any restriction
about their use would be fully exempt from wealth
tax from the a.y.1999-2000.
30. Flats, Apartment and Buildings (Residential)
A residential building
as a general rule is a part of the expression
"Assets" which are liable to wealth tax under
the Wealth Tax. Act from the Assessment Year
1993-94. However, certain residential buildings,
apartment or flats are fully exempt from wealth
tax. For example, a house meant exclusively for residential
purposes and allotted by a company to an employee or an
officer or a director who than Rs. 2 lakh would not
be liable to wealth tax. Likewise, any house
for residential purposes which forms part of
stock-in-trade of an assessee is not liable to
wealth tax. From the Assessment Year 1994-95 one
house of an individual or a Hindu undivided family would
be completely exempt from wealth tax, without any monetary
limit as per the amended provisions of Section 5(1)
(vi) of the Wealth Tax Act. The Finance (No.2)
Act, 1998 w.e.f. the A.Y. 1999-2000 provides
that the flats, apartments & buildings
(residential) would be exempt from wealth from
wealth tax if they are given on for more than 300 days in
year. |