Wealth tax

This query is : Resolved

Rahul Sharma (Querist)
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09 January 2015 Dear Sir,

I have query regarding the Applicability of wealth tax, in our case :

- A Pvt. Ltd. Company having following assets

- A Residential Flat having cost of Rs.90L

- Profit Share in Partnership Firm

- Cars

- Industrial Land ( Half land is leased out for more than 300 days and another half is vacant)

Please advice, what would be the treatment in wealth tax applicability

With Best Regards

Mohit Singla

Mohit Singla (Expert)
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09 January 2015 1.if the Flat meant exclusively for residential purposes and which is allotted by your company to an employee or an officer or a director who is in whole-time employment, having a gross annual salary of less than ten lakh rupees, Then wealth not apply, otherwise you have to compute wealth tax on valuation date,
2. motor cars are also covered the only exception is that those used by the assessee in the business of running them on hire or as stock-in-trade.
3
Profit sharing is never an asset as per wealth tax act, so no question of wealth tax.
4. In case of Industrial land ( if covered in the area of municipality) then only wealth tax apply.
If any construction work has been done which is not completed yet,
Then it losses the character of land, and out of the ambit of wealth tax.

Rahul Sharma

Rahul Sharma (Querist)
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12 January 2015 Thanks A lot Mohit JI.

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Rahul Sharma

Rahul Sharma (Querist)
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12 January 2015 Mohit Ji,

if we are giving the flat to an employee than it would be the perquisite in his hand. so can we use the flat as a guest house for customers or can give a flat to 4-5 employees, so that the burden of perquisite will be share by each employee. please advice.

With Best Regards
Rahul

Mohit Singla

Mohit Singla (Expert)
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13 January 2015 Yes Rahul
If you provide flat as guest house to customer, their would be no implication of wealth tax.
Because the basic concept behind the wealth tax is that tax should be charged on those items which are not help full in economic Growth (as the money is blocked in these items). But in both the cases the, our assets is in business use.
So no implication of wealth tax

Rahul Sharma

Rahul Sharma (Querist)
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13 January 2015 Thanks Mohit Ji but still not clear, if i am not wrong :

As per Section 2(ea)(i)- Guest house, residential house or commercial building cover under the heading of assets.

Further, there is an exception of house u/s 2(ea)(i)(3)- a house used for own business or profession, so under this category wealth tax not applicable.

furthermore, if flat is still not possessed by entity then what will be the impact.

please help for better understanding.

thanks
rahul