Wealth Tax Act (XV of 1963)---

----Ss. 2(e)(2) & 2 (5)(ii)---Assets---Open plot owned by a Society---Use of such plot for sports, marriages and social welfare on receipt of nominal charges which were not even equal to maintenance charges---Such open plot was included in taxable wealth on the basis of receipt of rent which was excluded from- taxable wealth by the First Appellate Authority---Validity---Such an important and expensive land could earn millions for the Society but physical and mental nourishment vis-a-vis development of sports and sportsman spirit was more important than making money from commercial plazas or activities of the similar kinds---Such was a non-business activity, not only because it was noble cause but the charge of a token money for providing such facilities could not be considered as a business activity as the same was neither a business of letting out nor the purpose of development of these plots was business---Charge on net assets of a property held by an association of persons was only where such property was held for the purpose of the business of letting out---Society was not involved in the business of the letting out neither it had been formed for such purpose---Such utilization of open plot not held for the purpose of letting out, did not fall within the definition of asset under S.2(e)(ii) of the Wealth Tax Act, 1963-- Order of the First Appellate Authority was upheld by the Appellate Tribunal.

Mrs. Sabiha Mujahid, D.R. for Appellant.

Ch. Yousaf Ali, I.T.P. for Respondent.

Date of hearing: 18th September, 2002.

ORDER

KHAWAJA FAROOQ SAEED (JUDICIAL MEMBER).---The Department has field this appeal. The grounds, which are supported by the similar arguments, are as follows:---

(i) That the learned CIT/WT (Appeals) Lone-II Lahore is not justified in directing the Assessing Officer to delete the capitalized value on account of booking of open plots and grounds without any cogent reasons.

(ii) That the booking of open plots and grounds on rent/lease also fall in the definition of asset as defined in section 2(e)(ii) of the Wealth Tax Act, 1963."

The learned DR says that the assessee having received rent of open plots was liable to be assessed on its net wealth. The plots are taxable as an AOP; hence the CIT(A) was not justified in excluding the same from the taxable wealth. She further remarked that the Society receives payment on utilization of its facilities. In income-tax proceedings receipts are being declared as business income, which obviously means that asset was taxable.

The A.R., on the other hand says that these plots are not being used as a commercial holding. The same have been kept for general welfare and sometimes they are temporarily provided to sportsman for playing matches. The Society charge nominal amount from such persons, which is not even equal to maintenance charges of these facilities. The assets, are neither business assets nor they are being commercially exploited.

We have heard both and have also gone through the relevant orders etc. The fact that the plots are being used by youth of the area as well as inhabitants for marriage purposes is not being denied. It has also been conceded that these plots if commercially exploited could yield millions but, however, keeping in view general welfare it is being kept as sporting facility for youth and other members of the Society. These playgrounds are for al' and every body though not yet enough to facilitate the majority population of the area. Similarly, the facility provided for marriage against nominal charges cannot be considered as a business transaction. It is correct that the income received from this source is being charged to tax, but, however, it cannot be said that these plots are being held for commercial exploitation. Obviously, such an important and expensive land can earn millions for the Society but physical and mental nourishment vis-a-vis development of sports and sports man spirit is more important than making money from commercial Plazas or activities of the similar kinds. It is not only because it is noble a cause that we consider this to be as non-business activity but the charge of a taken money for re-habilitation of such facilities cannot be considered as a business activity. This is neither a business of letting out nor the purpose of development of these plots is business. The charge on net assets of a property held by an AOP is only where, such property is held for the purpose of the business of the letting out. The Society is not involved in the business of the letting out neither do it has been formed for this purpose.

Keeping in view of the ambient circumstances, we have no hesitation in holding that such utilization of open plot not held for the purpose of letting out, do not fall within the definition of asset under section 2(e)(ii) of Wealth Tax Act, which obviously means that the order of the CIT(A) is upheld.