1992 (1) TMI 141 - AT - Wealth-tax

Summary

Issues Involved:

1. Satisfaction of conditions under Section 45(d) of the Wealth-tax (WT) Act.
2. Application of Income-tax (IT) provisions to WT cases.
3. Deletion of Rs. 30,000 disallowed under Section 5(1)(xxiii) of the WT Act.
4. Consideration of Section 21(4) of the WT Act.

Issue-wise Detailed Analysis:

1. Satisfaction of Conditions under Section 45(d) of the WT Act:

The primary issue concerns whether the assessee satisfied the conditions under Section 45(d) of the WT Act. The assessee, a trust created by a will dated 19th November 1975, claimed exemption from the WT Act. The Wealth Tax Officer (WTO) denied this claim, citing an amendment effective from 1st April 1980, which stipulated that the trust must be the only one created by the individual for exemption to apply. The WTO argued that the machinery used by the assessee was second-hand, purchased from M/s Gein Maskiner AB of Sweden, and thus did not fulfill the conditions of Section 45(d).

The Commissioner of Wealth Tax (CWT)(A) allowed the appeal, stating that similar conditions in the IT Act (under sections like 80-I and 80HHA) clarified that machinery or plant imported into India and not previously used in India would satisfy the conditions of Section 45(d). The CWT(A) directed the WTO to allow the exemption under Section 5(1)(xxiii).

2. Application of Income-tax Provisions to WT Cases:

The Department contended that importing explanations from the IT Act to interpret the WT Act was erroneous. The Departmental Representative argued that Section 45(d) of the WT Act does not contain exclusions similar to those in the IT Act, and it is not for interpreting authorities to add or exclude qualifications not specified by the legislature. Citing Supreme Court cases, the Department emphasized that interpreting authorities should not enlarge the scope of taxing provisions to grant advantages not explicitly provided by the legislature.

3. Deletion of Rs. 30,000 Disallowed under Section 5(1)(xxiii):

The assessee claimed exemption for an investment of Rs. 30,000 in shares of Ganapathi Pulp and Paper Mills Ltd. under Section 5(1)(xxiii) read with Section 45(d) of the WT Act. The WTO rejected this claim, stating that the conditions of Section 45(d) were not met as the machinery was second-hand. The CWT(A) overruled this, stating that the conditions under Section 45(d) were satisfied, and the investment should be exempted.

4. Consideration of Section 21(4) of the WT Act:

The Department argued that the Dy. CIT(A) should have considered Section 21(4) of the WT Act, which pertains to the assessment of trustees in the like manner and to the same extent as beneficiaries. The CWT(A) determined that since the beneficiaries were individuals, the trust should be treated as an individual for exemption purposes under Section 5(1)(xxiii).

Conclusion:

The Tribunal dismissed the Department's appeal, upholding the CWT(A)'s decision. The Tribunal agreed with the assessee's interpretation that the conditions of Section 45(d) of the WT Act were met, and the exemption under Section 5(1)(xxiii) was applicable. The Tribunal emphasized that while interpreting taxing statutes, it is permissible to consider the legislative intent and purpose, and not just the literal wording.