1993 (2) TMI 170 - AT - Wealth-tax

Business Expenditure, Capital Expenditure, Foreign Company, Revenue Expenditure, Technical Know-how

Summary

Issues:
Interpretation of section 40(3)(vi) of the Finance Act, 1983 regarding exemption for theatre building used for cinema exhibition purposes. Whether a cinema house can be considered as 'plant' for depreciation allowance. Applicability of the amendment to section 40(3)(vi) introduced on 1-4-1989 to the assessment year 1989-90.

Analysis:
The appellant company appealed against the CIT(A)'s order upholding the WTO's decision to include the theatre building in wealth-tax, arguing for exemption under section 40(3) of the Finance Act, 1983. The provision excludes buildings used for specific business purposes, but cinema houses are not explicitly mentioned. The provision came into effect from 1-4-1989, relevant for the assessment year 1989-90.

During the hearing, the appellant's counsel argued that the theatre building should be treated as 'plant' for depreciation, citing precedents where similar claims were accepted. The counsel relied on various judgments and the rule of ejusdem generis to support the contention that cinema theatres should be exempt from wealth-tax under the provision.

The departmental representative contested the appellant's arguments, emphasizing the valuation made by the WTO and the objective of wealth-tax to tax surplus wealth. The representative referred to relevant judgments and circulars to support the position that the amendment to section 40(3)(vi) was prospective and not retrospective.

The Tribunal analyzed the arguments and legal provisions, concluding that the theatre buildings, though used exclusively for cinema exhibition business, were not eligible for exemption under section 40(3)(vi) of the Finance Act, 1983. The Tribunal held that the amendment introduced in 1989 was prospective in nature, and the appeals of the assessee were dismissed accordingly.