WEALTH TAX
This query is : Resolved
05 May 2010
In wealth tax aircraft,boats,yachts are exempt if used for commercial purpose,and stock-in-trade by individual,company,and HUF.
Thus,commercial purpose includes aircraft used by the employees and auditors of the company/individual.
I am doing c.s.,in suggested guidelines of DECEMBER 2009 tax law paper valuation of aircraft is not included for individual. But in June 2005 valuation of boat is included.
please help me.
Thus,commercial purpose includes aircraft used by the employees and auditors of the company/individual.
I am doing c.s.,in suggested guidelines of DECEMBER 2009 tax law paper valuation of aircraft is not included for individual. But in June 2005 valuation of boat is included.
please help me.
05 May 2010
JUST CHECK WHEATHER THE BOAT IS USED FOR PERSONAL PURPOSE OR NOT.
05 May 2010
Individual is always taxable for aircrafts whether used by him or his employees. company is not taxable for aircrafts used by the employees
03 August 2025
You're asking a very good and nuanced question regarding **aircrafts, boats, and yachts** under the **Wealth-tax Act, 1957**, especially in the context of usage and ownership by **individuals**, **HUFs**, and **companies**. Let's break this down clearly:
---
## 📘 **Relevant Provision: Section 2(ea) of the Wealth-tax Act, 1957**
This section defines the term **“assets”** chargeable to wealth tax and also mentions **exclusions**.
### **Section 2(ea)(iv):**
> “Yachts, boats and aircrafts (other than those used by the assessee for commercial purposes)” shall be considered as **assets**.
---
## ✅ **Key Rules for Aircrafts, Boats, and Yachts**
| Assessee Type | Used for Personal Purpose | Used for Commercial Purpose |
| -------------- | --------------------------- | ------------------------------------------------- |
| **Individual** | ✅ Taxable | ❌ Not taxable |
| **HUF** | ✅ Taxable | ❌ Not taxable |
| **Company** | ✅ Taxable (if personal use) | ❌ Not taxable (if used by employees for business) |
---
## ⚖️ **Clarification on “Commercial Purpose”**
* The **term “commercial purpose”** is interpreted based on whether the asset is used **in the course of business**.
* If an **aircraft is used by employees, directors, or auditors of the company for official work**, that is considered **commercial use**, and **it is NOT taxable under Wealth Tax** for the company.
* However, if an **individual owns an aircraft** and uses it personally or **even if their employees use it**, the aircraft **is taxable** under wealth tax — because **the individual is not deemed to be using it for commercial operations** like running an airline or charter service.
---
## 🔍 Your Specific Doubts:
### 📌 **Q1: Aircraft used by employees — taxable for individual or not?**
✅ **Yes**, **taxable** if owned by **individual**, even if used by employees or auditors.
❌ **Not taxable** if owned by **company** and used for official business purposes.
### 📌 **Q2: Boat valuation — why included in some attempts and not in others?**
That depends on **context and assumptions in the exam paper**:
* If **used for personal recreation** – ✅ Taxable
* If **used for fishing business or commercial ferry** – ❌ Not taxable
Hence, in **June 2005** attempt, the boat **might have been used for personal purposes**, making it **taxable**.
In **December 2009**, the aircraft was likely treated as **non-taxable for company** if used commercially.
---
## 📝 **Conclusion**
* **Commercial use** must be **real, business-related**, not just organizational.
* For **companies**, commercial use = exempt.
* For **individuals/HUFs**, **personal or employee use still means it's taxable** unless you're in the business of operating such assets.
---
Would you like me to pull in **any specific case law or circular** to support this interpretation for your CS exam notes or understanding?
---
## 📘 **Relevant Provision: Section 2(ea) of the Wealth-tax Act, 1957**
This section defines the term **“assets”** chargeable to wealth tax and also mentions **exclusions**.
### **Section 2(ea)(iv):**
> “Yachts, boats and aircrafts (other than those used by the assessee for commercial purposes)” shall be considered as **assets**.
---
## ✅ **Key Rules for Aircrafts, Boats, and Yachts**
| Assessee Type | Used for Personal Purpose | Used for Commercial Purpose |
| -------------- | --------------------------- | ------------------------------------------------- |
| **Individual** | ✅ Taxable | ❌ Not taxable |
| **HUF** | ✅ Taxable | ❌ Not taxable |
| **Company** | ✅ Taxable (if personal use) | ❌ Not taxable (if used by employees for business) |
---
## ⚖️ **Clarification on “Commercial Purpose”**
* The **term “commercial purpose”** is interpreted based on whether the asset is used **in the course of business**.
* If an **aircraft is used by employees, directors, or auditors of the company for official work**, that is considered **commercial use**, and **it is NOT taxable under Wealth Tax** for the company.
* However, if an **individual owns an aircraft** and uses it personally or **even if their employees use it**, the aircraft **is taxable** under wealth tax — because **the individual is not deemed to be using it for commercial operations** like running an airline or charter service.
---
## 🔍 Your Specific Doubts:
### 📌 **Q1: Aircraft used by employees — taxable for individual or not?**
✅ **Yes**, **taxable** if owned by **individual**, even if used by employees or auditors.
❌ **Not taxable** if owned by **company** and used for official business purposes.
### 📌 **Q2: Boat valuation — why included in some attempts and not in others?**
That depends on **context and assumptions in the exam paper**:
* If **used for personal recreation** – ✅ Taxable
* If **used for fishing business or commercial ferry** – ❌ Not taxable
Hence, in **June 2005** attempt, the boat **might have been used for personal purposes**, making it **taxable**.
In **December 2009**, the aircraft was likely treated as **non-taxable for company** if used commercially.
---
## 📝 **Conclusion**
* **Commercial use** must be **real, business-related**, not just organizational.
* For **companies**, commercial use = exempt.
* For **individuals/HUFs**, **personal or employee use still means it's taxable** unless you're in the business of operating such assets.
---
Would you like me to pull in **any specific case law or circular** to support this interpretation for your CS exam notes or understanding?
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