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TMI Blog1964 (3) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... ss from its inception in the manufacture and sale of sugar under the name and style of K.C.P. Ltd., Vuyyur. Some time later, it decided to set up a cement factory as a separate unit described as Messrs. Ramakrishna Cements, Macherla. Pursuant to this resolution, the assessee purchased the machineries for installing the cement factory in the year 1954-55. The factory was actually setup and was ready for production in February, 1958. Meanwhile, the Act came into force on 1st April, 1957. Taking advantage of the Act, the relevant provisions of which will be referred to presently, the assessee claimed exemption for the three assessment years set out in the reference. This claim was opposed by the department on the ground that the assessee coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged is that the assessee would be entitled to exemption only from the date of the setting up of the unit and not from the date of the actual commencement of operations and that this should not extend beyond five years of the commencement of the operations for the establishment of the unit. We are not persuaded that this interpretation is warranted by the terms of the relevant provisions of the statute. It is section 5 of the Act which specifies the assets which are exempt under the Act. Section 5, in so far as it has a bearing on this enquiry, recites : "5. (1) Wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee-- (xxi) that portion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... makes it plain that the relief can be claimed for five successive assessment years and not for any five assessment years from the date of the commencement of the operations. The proviso comes into play only when the conditions of clause (xxi) are satisfied, viz., that the new and separate unit should be set up after the commencement of the Act. If the new unit was set up prior to the commencement of the Act, no exemption would be granted notwithstanding that, at the time the claim is made, the five years from the date of the commencement of the operations for the establishment of the unit have not expired. There is no scope for interpreting these provisions of law as meaning that the exemption could be claimed only from the date of the set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up after the Act, the operations for the establishment commenced earlier than the Act. " Although this reasoning seems to be quite plausible, it is not necessary for us to express any final opinion on this aspect of the matter, as the assessee itself has not claimed exemption for the previous assessment year 1956-57 and confined it for three years beginning with 1957-58. Sri Kondaiah invites our attention to section 45(d) and urges on its basis that the claim is referable only to a period after the setting up of the factory and not after the commencement of the operations for the establishment of the unit or even the commencement of the Act. To appreciate this argument, it is necessary to extract the terms of section 45, omitting the unn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e effect should be given to the second proviso. In other words, what the learned counsel urges is that, if under the proviso to section 45(d), it is the actual establishment of the company, there is no reason why a different intent should be ascribed to the second proviso to clause (xxi). The reason for the difference is obvious. In section 45(d) in the second part of the proviso, the language used is "following the date on which the company is established " which is analogous to the setting up of the " new and separate unit " in clause (xxi) of section 5. The second proviso to clause (xxi) does not talk of the five successive assessments commencing with the assessment year next following the establishment of the unit but of the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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