2003 (12) TMI 3 - HC - Wealth-tax

Immovable properties held as business assets - scope of section 40(3) of Finance Act, 1983 - assessee contends that the value of the assets should not be taken into account for determining the assessee s liability is that these assets are held by the assessee as stock-in-trade - Whether Tribunal is right in law in holding that the immovable properties held as business assets cannot form part of the subject matter of wealth-tax? - non-exclusion of stock-in-trade from the ambit of levy of wealth tax cannot per se be regarded as an obvious omission , nor is giving it immunity from levy of wealth-tax necessary for reasonably interpreting the unamended provision. - We do not therefore see any good reason to depart from the view taken by this court in the earlier decision that the Finance Act, 1988 which amended portions of the Finance Act, 1983, and extended the exemption from wealth tax, inter alia, to the value of cinema house and the value of stock-in-trade, is not retrospective. The question is answered in favour of the Revenue

Summary

Issues:
Whether immovable properties held as business assets can form part of the subject matter of wealth-tax for the assessment years 1984-85 to 1988-89.

Analysis:
The judgment dealt with the question of whether immovable properties held as business assets, specifically land and buildings, could be considered for wealth-tax assessment. The assets in question fell within the scope of section 40(3) of the Finance Act, 1983. The court referred to previous cases to establish the principle that amendments to tax laws are generally prospective, not retrospective. It cited cases where assets like filigree silver, silverware, and motor cars held as stock-in-trade were held assessable to wealth-tax. The court emphasized that the amendment by the Finance Act of 1988, extending exemptions to certain assets, was prospective and not retrospective.

The court addressed the argument put forth by the assessee's counsel, who relied on a Rajasthan High Court decision regarding the inclusion of cinema houses in wealth-tax assessment. The court disagreed with this view, stating that the test for retrospective application of an amendment is whether the unamended provision can reasonably include the subsequent amendment. In this case, the court found that the unamended provision did not support excluding stock-in-trade from wealth-tax assessment.

Furthermore, the court distinguished the case from a Supreme Court decision related to unintended consequences in tax laws. It clarified that the non-exclusion of stock-in-trade from wealth tax cannot be considered an obvious omission requiring retrospective application. The court reaffirmed its position that the Finance Act of 1988, which extended exemptions to assets like cinema houses and stock-in-trade, should not be applied retrospectively.

In conclusion, the court ruled in favor of the Revenue and against the assessee, holding that immovable properties held as business assets, including stock-in-trade, are liable to be included in wealth-tax assessment for the relevant years.