TMI Blog2006 (8) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... uation date is an asset within the meaning of s. 2(ea) of the WT Act. 3. The facts in brief can be stated that both the assessees are cashew exporters and it is not disputed that the status of both the assessees is individual. It was noticed by the AO that in the balance sheet filed by the assessees, huge cash in hand was reflected on the valuation date as under: ---------------------------------------------------- Sl. WTA No. Asst. yr. Cash in hand reflected No. in the balance sheet as on 31st March ---------------------------------------------------- 1. 35/2002 1994-95 57,32,470 2. 36/2002 1995-96 73,17,144 3. 37/2002 1996-97 19,31,064 4. 38/2002 1997-98 82,12,900 5. 39/2002 1998-99 1,24,46,221 6. 110/2005 2000-01 2,62,27,855 7. 134/2005 1999-2000 38,87,922 8. 135/2005 2000-01 80,56,707 ---------------------------------------------------- 4. We have heard the learned Authorised Representative, Shri A.S. Narayanamoorthy, chartered accountant, for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies are concerned, normally, they are engaged in the business or trade, but it may not be the case of individuals and HUFs. The individuals and HUFs may be engaged in business, profession, occupation, vocation or may not be also. He further argued that in case of individuals and HUFs, if the cash is not recorded in the books of account, then beyond Rs. 50,000, subject to the limits of exemption, it will be charged under the WT Act. But, if the individual and HUF are engaged in the business and cash in hand is duly recorded in the books of account, that cash in hand qualifies for exemption as an asset. He further submitted that the AO as well as CWT(A) have mis-interpreted the provisions of s. 2(ea) of the WT Act and brought to tax the productive assets which is never the intention of the legislature. It was further argued that if the assessees had deposited the said cash one day earlier in their bank accounts and did withdraw immediately on next day of the date of valuation then that is not liable for wealth-tax and certainly that is not the legislative object. The cash in hand reflected in the books of the assessees is a part of their business assets. 5. On the other hand, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de wholly or partly of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals: Provided that where any of the said assets is used by the assessee as stock-in-trade, such asset shall be deemed as excluded from the assets specified in this sub-clause; (iv) yachts, boats and aircrafts (other than those used by the assessee for commercial purposes); (v) Urban land; (vi) cash in hand, in excess of fifty thousand rupees, of individuals and HUF and in the case of other persons any amount not recorded in the books of account. Explanation: For the purpose of this clause,- (a) 'jewellery' includes- (i) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stones, and whether or not worked or sewn into any wearing apparel; (ii) precious or semi-precious stones, whether or not set in any furniture, utensils or other article or worked or sewn into any wearing apparel; (b) 'urban land' means land situated- (i) in any area which is comprised within the jurisdiction of a municipality (Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-productive assets such as residential houses including farm houses and urban land, jewellery, bullion, motor cars, planes, boats and yachts which are not used for commercial purposes. The committee has further suggested that such tax should be at the rate of one per cent, with a basic exemption of Rs. 15 lakhs. I propose to accept this recommendation and I hope this change will encourage investments in productive assets and discourage investment in ostentatious non-productive wealth". 9. After the said Bill was converted into the Act, the CBDT vide Circular No. 636, dt. 31st Aug., 1992, explained the provisions of the Finance Act, 1992, and the relevant extract of the said circular is reproduced as under: "54. With a view to stimulating investment in productive assets, the Finance Act has abolished wealth-tax on all assets except certain specified assets. The term 'asset' will include guest-houses and residential houses including farm houses within twenty-five kilometres from the local limits of any municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht which are not used for commercial purposes. Hence, while interpreting the term "productive asset", we have to interpret it in the context of the commercial assets. It means that assets which are used for commercial purposes are productive assets and assets which are not used for commercial purposes are non-productive assets. Though the term "commercial asset" has not been precisely defined, but the term "commercial activity" has been defined in the Law Lexicon Second Edition, Reprint 2000 by R. Ramanatha Iyer "to include any type of business or activity which is carried on for a profit." The term "commercial asset" has been defined as an asset which is a part of the business or activity which is carried on for a profit. 12. Now, we will have to consider the relevance of the speech of the Hon'ble Finance Minister while moving the Bill on the floor of the House as well as the circular issued by the CBDT for finding out the intention of the legislature to bring a particular provision on the statute book. The relevance of the Finance Minister's speech for the purpose of finding out the object of the amendment for interpreting the statutory provisions has got the approval of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight, it is highly persuasive." 14. In s. 2(ea), the assets like motor car, jewellery, bullion or furniture which are held by the assessees either for the use of the business or running them on hire or as stock-in-trade are excluded from the ambit of "asset". Even in the case of yachts, boats and air crafts which are used for commercial purposes are also excluded from the definition of "asset". We will have to take into consideration while interpreting cl. (vi) which specifically deals with the treatment to be given in respect of cash in hand, the entire definition of "asset" as it was brought on the statute book. There is force in the argument of the learned Authorised Representative that no discrimination can be made in respect of the productive and non-productive assets as per the category of the assessees and hence, the proper construction of cl. (vi) in case of an individual and HUF should be if the cash in hand is not recorded in the books of account in excess of Rs. 50,000 then it will be non-productive asset. But, if the cash in hand is recorded in the books of account whether the assessee is individual, HUF or company, then it is not an asset for the purpose of charging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we can also consider is that wealth-tax is charged on the specific valuation date. Now, bank accounts are not included in the definition of "asset". In case of both these assessees, presuming one day immediately preceding the date of valuation they would have deposited their amounts in their bank accounts and immediately next day after the valuation date, they would have withdrawn that amount, then they could not have been otherwise also liable for the wealth-tax and it is much more easier for the individuals and HUFs. Though as per the general principles of interpretation where the wordings of a statute are plain, precise and unambiguous, the intention of the legislature is to be gathered from the language of the statute itself and no help of external aid should be taken, but when the statute is not exhaustive or where its language is ambiguous, uncertain, clouded or susceptible of more than one meaning, then certainly the external aid can be taken for finding out the legislative intent. As we have already observed, in both these cases, for the reasons given above, the cash in hand brought to tax for the purpose of WT Act by including the same for the purpose of computing the net ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the language used by the legislature and the legislature has already considered the nature of motor car as a productive and non-productive asset. This issue is, therefore, decided against the assessees and in favour of the Revenue. 20. Now, we are taking up the Revenue's appeals. The first issue in the Revenue's appeals is regarding directions of the CWT(A) to value cash in hand under r. 14 of Sch. III to the WT Act. As we have already held that cash in hand recorded in the books of account of the assessee is not an asset, hence this issue does not survive and the relevant grounds taken by the Revenue stand rejected. 21. The next issue which arises in the Revenue's appeals, more particularly in WTA Nos. 62, 63 and 64/Coch/2002, is in respect of the directions of the CWT(A) to grant exemption to the assessee under s. 5(vi) of the Act in respect of the land and building at Thevally. In respect of the asst. yr. 1996-97, while computing the net wealth the AO included the market value of 58.75 cents of land at Thevally, Kollam, purchased by the assessee vide document No. 1607, dt. 20th April, 1995, for Rs. 31,33,150. As far as asst. yrs. 1996-97, 1997-98 and 1998-99 are concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
