1985 (1) TMI 107 - AT - Wealth-tax

Summary

Issues:
- Claim of exemption under section 5(1)(xxa) of the Wealth-tax Act, 1957 in respect of share holdings in Doyen Gases (P.) Ltd.
- Interpretation of whether the gases manufactured by Doyen Gases (P.) Ltd. qualify as heavy chemicals for exemption under section 5(1)(xxa).

Analysis:

Issue 1: Claim of exemption under section 5(1)(xxa) of the Wealth-tax Act, 1957
The assessee's claim for exemption under section 5(1)(xxa) was rejected by the WTO and the AAC. The counsel for the assessee argued that the share-holding was in a concern manufacturing heavy chemicals, supported by references from technical books and authorities. The departmental representative contested this claim, stating that the gases produced were not heavy chemicals as per the Ninth Schedule of the Income-tax Act. However, after considering the technical aspects and definitions from various sources, the Tribunal concluded that the share-holding was indeed in a concern producing heavy chemicals, making the assessee eligible for exemption under section 5(1)(xxa).

Issue 2: Interpretation of whether gases manufactured qualify as heavy chemicals
The dispute centered on whether the gases manufactured by Doyen Gases (P.) Ltd. qualified as heavy chemicals for exemption under section 5(1)(xxa). The lower authorities denied the claim, arguing that the company was established to manufacture inorganic heavy chemicals. The Tribunal delved into the definitions of 'inorganic' and 'heavy chemicals' from literary sources and technical books. It was established that nitrogen and oxygen, the gases produced, fell under inorganic chemistry and heavy chemicals, respectively. Various references, including definitions from dictionaries and encyclopedias, supported the classification of the gases as heavy chemicals. The Tribunal concluded that there was no ambiguity in the company's manufacturing activities, determining that the gases produced indeed qualified as heavy chemicals, thereby entitling the assessee to exemption under section 5(1)(xxa).

In conclusion, the Tribunal allowed the appeals, reversing the decisions of the lower authorities and granting the assessee exemption under section 5(1)(xxa) of the Wealth-tax Act, 1957.