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TMI Blog1985 (11) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to wealth-tax as under : "Immovable Properties : Building leased out to Perinthalmanna Rice Oil Mills, Rs. Perinthalmanna 40,000.00 State Warehousing Corporation 35,000.00 Value of building machinery at Premier Flour Mills 74,960.00 1,49,960.00 Less exemption under section 5(1)(xxxii) 1,03,910.00 ---------------------- Balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 35 by denying the exemption originally allowed. 3. In the appeal filed before the AAC, the assessee argued that there was no mistake apparent from the record to be rectified and that the assessee's claim should have been allowed under section 5(1)(xxxi) since the industrial undertakings belonged to the assessee. The AAC held that the WTO's action in seeking recourse to the provisions of section 35 was justified. He also upheld the action of the WTO in denying exemption under section 5(1)(xxxi) to the assessee. Aggrieved by the order of the AAC the assessee preferred the present appeal. 4. At the time of hearing, the assessee's counsel urged that the WTO was not justified in resorting to section 35 as there was no mistake apparent fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Fifth Schedule. Similarly, in the present case the ownership of the assets forming part of the industrial undertakings is the condition precedent for granting exemption and not the industrial activity of the assessee using those assets. The assessee's counsel was fair enough to bring to our notice the decision of the Madras High Court in the case of CWT v. P. T.N. Shenbagamoorthy [1983] 144 ITR 724 wherein it was held that the assessee, who owned the salt pans but who had leased out the same to a third party, could not be held to be actually engaged in the manufacture of salt and, consequently, could not get exemption under section 5(1)(xxxi). He further submitted that in view of the above arguments advanced the decision of the Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. WTO [1968] 69 ITR 897 stated as under : "The Wealth-tax Act, 1957, is within the legislative competence of Parliament under entry 86 of List I of the Seventh Schedule to the Constitution of India. The tax which is contemplated by entry 86 of List I of Schedule VII to the Constitution of India is not directly a tax on lands and buildings. It is a tax on the capital value of the assets of individuals and companies on the valuation date. The wealth-tax is not imposed on the components of the assets of the assessee; it is imposed on the total assets which the assessee owns,..." Section 2(m) of the Act defines net wealth as the amount by which the aggregate value of all the assets belonging to the assessee in excess of the aggregate valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to clause (d) of section 45, as is employed by it in a new and separate unit set up after the commencement of this Act by way of substantial expansion of its undertaking' or in clauses (ix) and (x) of sub-section (1) of section 5 which speak of 'the tools, implements and equipment used by the assessee for cultivation' and 'tools and instruments necessary to enable the assessee to carry on his profession or vocation'. Since we have taken the above view, with due respect we beg to differ from the view taken by their Lordships of the Madras High Court in the case of P.T.N. Shenbagamoorthy. We, therefore, direct the WTO to allow the assessee exemption under section 5(1)(xxxi). 7. In the result, the appeal is partly allowed. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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