TMI Blog1993 (1) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... Building in the wealth-tax is against the provisions of section 40(3) of the Finance Act, 1983. Provisions of section 2(e)(v) of the Wealth-tax Act, 1957 could not be invoked in contravention of the specific provisions of sub-section (4) of section 40 of the Finance Act, 1983. Clause (vi) of sub-section (3) of section 40 of the Finance Act, 1983 has been substituted by Finance Act. 1988 with effect from 1-4-1988 whereby the word " Cinema House " is also included. This being retrospective in nature effect should have been given. Alternatively it was pleaded that the Cinema Building cannot be included in the wealth of the assessee in view of the decision of the Supreme Court in the case of F. S. Gandhi v. CWT [1990] 184 ITR 34. 4. In order to appreciate controversy it is worthwhile to mention the facts of the case. The facts of the case are that the assessee-company owns a cinema known as Naaz Cinema. It was constructed way back in 1959 on lease-hold land at Jhandewalan, New Delhi. The land belonged to Delhi Improvement Trust and in the year 1948, Delhi Improvement Trust leased out the land to M/s. Raisina Cold Storage Ice Pvt. Ltd. with effect from 27-1-1948 for a period of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out that in this decision the object of substituting the Cinema building is also mentioned. It was pointed out that with a view to remove this unintended hardship and provide incentive for growth and modernisation the amendment was brought in section 40 of Finance Act, 1983 w.ef. 1-4-1988 by Finance Act, 1988. In the memorandum explaining this provision itself the connotation of ' substituted ' was incorporated in this order and it was pointed out that the word ' substituted ' is of great significance, specially when contrasted with the other words and added in this section. Our attention was invited to the speech of the Finance Minister in which it is mentioned that the object of amendment was only to tax unproductive assets. The object of the provision of section 40 is to curb the attempt made by the individual to reduce the liability. It is clear from sub-section (2) of section 40 that while arriving at the net wealth of the company, only those assets which are referred to in sub-section (3) of section 40 can be considered. The provision of section 40 is self-contained and separate code by itself. It is not possible to read into this code the provisions of the wealth-tax i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Park Hotel (P) Ltd. [1992] 41 ITD 501 (Cal.) ; and (3) F.S. Ghandhi's case. As against this, the learned Departmental Representative Smt. Anuja Sarangi supported the action of the CWT (Appeals). 7. We have heard the learned Departmental Representative and opportunity was also given to the Valuation Officer Shri N.K. Sood who was present in the Court but he did not argue. The learned Departmental Representative Smt. Anuja Sarangi pointed out that the assessee has rented out the machinery, equipments, furniture, fittings etc. to M/s. Naaz Cinema and also exhibited one show. Therefore, it is deriving rental income and this rental income has value. Therefore, the CWT (Appeals) has rightly included the value of cinema building together with machinery, equipments, furniture, fittings etc. in the net wealth of the assessee. It was pointed out that the lease granted by the D.D.A. had expired in January 1988 only. Therefore, during the year under consideration the assessee had a right of lease-hold land. Thus this lease-hold land has a market value which was valued at the hands of the assessee. 8. We have considered the rival submissions. In the case of S.K. Tulsi Sons the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (vi) in section 40(3), so as to include the words ' cinema house ' in the list of items of building used by the assessee and exempt from wealth-tax. As noted in the memorandum explaining this provision itself, this substitution has been made to remove an unintended hardship. Thus, the provisions of the Finance Act, 1988 led one to presume that a cinema house was intended to be included in the list of assets exempt from wealth-tax even from inception because the connotation of ' substituted ' was that new clause should be taken to have been incorporated in place of the old clause from the very inception. This was also clear from the wording of the original clause itself which stated that building used by the assessee for the purpose of its business should be exempt. Hence, the assessments were to be annulled." The Tribunal has further observed that the word ' substituted ' in clause (c) of the Act is of great importance specially when contrasted with the other two words " Inserted " and " added " in the same section. It is to be presumed that Parliament has advisedly used this word to give it a meaning quite different from the other two so that it means that this amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the subject code. If while applying the provisions of section 2(e) it is found that it is not in conformity with the provisions of section 40 of the Finance Act, that section cannot be applied. Instant case, the immovable property could be brought to tax in the hands of the assessee company only if that property belonged to the assessee-company. It was common ground that the said property was not owned by the assessee-company. It would be doing violence to the express provision of section 40 of the Finance Act, 1983, if the provisions of section 2(e) were invoked to bring to tax the lease-hold interest of the assessee in the said immovable property even though the lease was for a period exceeding six years. The Legislature in its wisdom has specified various assets that are to be brought to tax in the hands of closely-held companies. Had it been the intention of the Legislature that all the provisions of the Wealth-tax Act should be made applicable, a simple expedient of amending the charging section (3) to include closely-held company as an amendment to section 13 of the Finance Act, 1960 would have been sufficient. Since the Legislature has thought of a separate scheme for le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T v. R.A. Muthukrishna Ammal [1969] 72 ITR 801, remained unaltered. (iii) That it must be assumed that, while enacting the Finance Act, 1969, Parliament was aware of the construction placed by the Supreme Court on the words " where the interest is available to an assessee for a period not exceeding six years " In Muthukrishna Ammal's case [1969] 72 ITR 801 (SC) and, in repeating those words in the amended section 2(e), Parliament must be taken to have used those words to bear the meaning which was put upon them by the Supreme Court. (iv) That, on the facts, after the expiry of the leases in 1958 and 1963, the assessee continued in possession under a new contract and the said tenancy was a tenancy from month to month for an unstated period. The new tenancy was precarious in nature because it could be terminated by the lessor, viz., the Government of U.P., at any time by a notice under section 106 of the Transfer of Property Act. The fact that such a notice was not given did not mean that the interest created by the new tenancy was an interest available to the assessee for a period exceeding six years from the date the interest vested in the assessee. In the circumstances, in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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