High Court Of Madras
Commissioner Of Wealth Tax vs. B.R. Theatres & Industrial Concerns (P) Ltd.
Sections FA1983 40(3), WT 3
Asst. Year 1984-85, 1985-86, 1986-87, 1987-88, 1988-89
R. Jayasimha Babu & S.R. Singharavelu, JJ.
Tax Case Nos. 130, 179 & 184 to 186 of 2000
1st December, 2003
Counsel Appeared
T. Ravikumar, for the Appellant : Philip George & P. Senthil Kumar, for the Respondent
JUDGMENT
R. Jayasimha Babu, J. :
The question referred is, :
“Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the immovable properties held as business assets cannot form part of the subject-matter of wealth- tax ?”
The assessment years are 1984-85 to 1988-89.
2. The assets referred to in the question are admittedly assets which fall within the scope of s. 40 (3) of the Finance Act, 1983. The ground on which the assessee contends that the value of the assets should not be taken into account for determining the assessee’s liability is that these assets are held by the assessee as stock-in-trade. The assets are land and buildings. This Court in the case of CWT vs. Varadharaja Theatres (P) Ltd. (2000) 162 CTR (Mad) 276 : (2001) 250 ITR 523 (Mad) held that the exemption granted to cinema houses w.e.f. 1st April, 1989, by the Finance Act, 1988, while computing the wealth of the closely held companies, which are subject to wealth-tax, was not retrospective and that it would take effect only from 1st April, 1989. This Court in that case dissented from the view to the contrary that had been taken by the Karnataka High Court in the case of CWT vs. Prakashi Talkies (P) Ltd. (1993) 202 ITR 121 (Kar). Subsequently, this Court in the case of CWT vs. Vummidi Bangaru Chetty (P) Ltd. (2002) 254 ITR 332 (Mad) held that the value of filigree silver and silverware, held by the assessee therein as stock-in-trade were assessable to wealth-tax for the asst. yrs. 1984-85 to 1988-89. More recently, this Court in the case of CWT vs. Reliance Motor Co. Ltd. (2003) 181 CTR (Mad) 86 : (2003) 260 ITR 571 (Mad) held that for the asst. yr. 1984-85 the value of the motor cars which form part of the stock-in-trade of the assessee was not exempt from wealth-tax.
The view taken in all the aforementioned cases is that the amendment effected to s. 40 of the Finance Act, 1983, by the Finance Act of 1988, is only prospective and not retrospective.
Learned counsel for the assessee here, despite those decisions, sought to contend that the value of the stock-in- trade was not includible in the net wealth, by placing reliance on a decision of Rajasthan High Court in the case of CIT/CWT vs. Jodhana Real Estate Development Co. (P) Ltd. (2002) 178 CTR (Raj) 305 : (2003) 259 ITR 79 (Raj). That judgment, inter alia, placed reliance on the decision of the Karnataka High Court, which has been dissented from by his Court in the case of Varadharaja Theatres (P) Ltd. (supra).
With respect, we are unable to subscribe to the view taken in that case of Jodhana Real Estate Development Co. (P) Ltd. (supra), wherein it was held that the value of the cinema house could not be included in the net wealth of the assessee even prior to 1st April, 1989, even though ‘cinema house’ was specifically included in the exempted class of buildings only after the amendment effected by the Finance Act, 1988.
The test to be applied for deciding as to whether a later amendment should be given retrospective effect, despite a legislative declaration specifying a prospective date as the date from which the amendment is to come into force is as to whether without the aid of the subsequent amendment the unamended provision is capable of being so construed as to take within its ambit the subsequent amendment. Applying that test, it is not possible for us to hold that stock-in-trade which is not excluded from wealth-tax in s. 40 of the Finance Act, 1983, is nevertheless to be regarded as having been excluded. No part of that section is capable of being given such a construction.
The decision of the Supreme Court in the case of Allied Motors (P) Ltd. vs. CIT (1997) 139 CTR (SC) 364 : (1997) 224 ITR 677 (SC) on which also the assessee’s counsel placed reliance does not support the view that in all cases of unintended hardship the later amendment should be regarded as forming part of the originally enacted law. In that case the Court while considering s. 43B of the Act and the amendment effected thereto by the Finance Act, 1987, which, inter alia, inserted a new proviso as also an Explanation held that as the Explanation was given retrospective effect, the proviso was also required to be given that effect, in order to place a reasonable construction on the section, as amended.
The Court in that case held that, “a proviso which is inserted to remedy the unintended consequence to make the provision workable, a proviso which supplies an obvious omission in the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole”.
The non-exclusion of stock-in-trade from the ambit of levy of wealth-tax cannot per se be regarded as an ‘obvious omission’, nor is giving it immunity from levy of wealth-tax necessary for reasonably interpreting the unamended provision.
We do not, therefore, see any good reason to depart from the view taken by this Court in the earlier decision that the Finance Act, 1988, which amended portions of the Finance Act, 1983, and extended the exemption from wealth-tax, inter alia, to the value of cinema house and the value of stock-in-trade, is not retrospective.
The question is answered in favour of the Revenue and against the assessee.
[Citation : 272 ITR 177]
