High Court Of Madhya Pradesh : Indore Bench
Commissioner Of Wealth Tax vs. Devshree Cinema
Section 1983FA 40(3)(vi)
Asst. Year 1987-88, 1988-89
Deepak Verma & N.K. Jain, JJ.
IT Ref. No. 4 of 1996
12th August, 2002
Counsel Appeared
R.L. Jain, for the Revenue : None, for the Assessee
JUDGMENT
BY THE COURT :
Mr. R.L. Jain, learned counsel for applicant Revenue.
2. Heard.
3. This reference under s. 27(1) of the WT Act, 1957, is made by the Tribunal, Indore Bench, Indore, at the instance of the Revenue, for resolution of the following question said to be a question of law : “Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the cinema theatre was entitled to exemption from wealth-tax for the asst. yrs. 1987-88 and 1988-89 and accordingly quashing the order of the CWT passed under s. 26(2) of the WT Act, 1957 ?”
4. The matter pertains to the asst. yrs. 1987-88 and 1988-89 and the core question is whether a cinema theatre is exempted from wealth-tax. Under s. 40 of the Finance Act, 1983, various properties were enumerated as the one exempted from wealth-tax. There was, however, no mention of cinema theatre. Now by the Finance Act of 1988, a cinema theatre is expressly included in the said list. It is, however, seen that in the Finance Act of 1983, the factory was one of the properties exempted from the WT Act. The High Court of Karnataka in CWT vs. Prakashi Talkies (P) Ltd. (1993) 202 ITR 121 (Kar) held, as below : “Under s. 40 of the Finance Act, 1983, provision was made to levy wealth-tax on certain assets owned by companies. The object was to prevent avoidance of wealth-tax liability by transfer of unproductive assets to closely held companies. As per cl. (vi) of sub-s. (3) of s. 40 of the Finance Act, 1983, which was enacted initially, any building or part thereof used by the assessee as factory, godown, warehouse, hotel or office, etc., for the purpose of assessee’s business, were excluded while computing net wealth. The term ‘factory’ is not defined and, therefore, a liberal approach to the interpretation of this provision would permit any entity which is governed by the Factories Act also to be treated as factory. If so construed, even under the earlier provision under s. 40(3), a cinema house would get excluded from being a taxable asset. Parliament amended the provision in 1988, whereby a cinema house was specifically included along with factory, godown, warehouse, etc. This amendment certainly is a curative amendment and, therefore, normally it could be treated as declaratory of the existing law. Hence, a cinema theatre is entitled to exemption from wealth- tax. The Tribunal was also right in holding that a cinema theatre was a plant under the provisions of the WT Act also.”
5. We tend to agree with the view taken by the Karnataka High Court. The word “factory” was not defined in the Finance Act of 1983. Naturally, the meaning assigned to this word in the Factories Act could be taken into account even for the purpose of wealth-tax. Under the Factories Act a cinema theatre was termed as a factory covered by the provisions of the said Act. In our considered judgment, the Tribunal has correctly interpreted the word “factory” occurring in the Finance Act of 1983. The cinema theatre was rightly treated as a factory and given exemption from wealth-tax. We, therefore, answer the question in the affirmative, i.e, against the Revenue and in favour of the assessee. This IT reference thus stands disposed of as aforesaid, but without any order as to costs.
[Citation : 258 ITR 425]
