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TMI Blog1965 (12) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... . In regard to the assessment of the wealth of the assessee-company to wealth-tax for that year, it claimed exemption of Rs. 33,01,964 under section 5(1)(xxi) of the Act on the ground of having employed that amount in the setting up of a new and separate unit after the commencement of the Act by way of substantial expansion of its undertaking. Section 5(1)(xxi) of the Act reads : " 5. Exemption in respect of certain assets.--(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 the net wealth of a company established with the object of carrying on an industrial undertaking in India within the meaning of the Explanation 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 : Provided that-- (a) separate accounts are maintained in respect of such unit ; and (b) the conditions specified in clause (d) of section 45 are complied with in relation to the establishment of such unit : Provided further that this exemption shall apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mencement of the Wealth-tax Act, namely, April 1, 1957. But the main provision of this section has to be read along with the provisos attached to it. The second proviso to this section says that the exemption provided in section 5(1)(xxi) shall apply to any such company only for a period of five successive assessment years commencing with the assessment year next following the date on which the company commences operations for the establishment of such unit. The Wealth-tax Act came into force on April 1, 1957. The proviso has not been given retrospective effect by the legislature as has been done in respect of section 45(d), wherein it was provided that, if a company had been established before the commencement of the Act, the period of five successive assessment years would be computed from the date on which the company was established as if the Wealth-tax Act had been in force on and from the date of its establishment. The learned counsel for the appellant argues that similar provision would apply to section 5(1)(xxi) and the period of five years of exemption, commencing from the assessment year next following the date on which the company commenced operations for the establishme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uite clear and admits of no ambiguity. In the present case the new unit was started after the commencement of the Wealth-tax Act and, since the other conditions prescribed by section 5(1)(xxi) have been duly complied with and the assessee's case falls within the ambit of that section, the assessee would be entitled to the exemption for a period of five years from July, 1955." It, therefore, allowed the appeal for the amount claimed as exemption in this respect to the assessee-company. On an application of the Commissioner of Wealth-tax, Punjab, Jammu and Kashmir, and Himachal Pradesh, the Tribunal has referred this question to this court for opinion : "Whether, on the facts and in the circumstances of the case, the sum of Rs. 33,01,964 was exempt under section 5(1)(xxi) of the Wealth-tax Act ?" It will be seen that the scope of the question on the facts is confined only to the assessment year 1957-58. The assessee-company, having commenced operations for the establishment of the new and separate unit in July, 1955, and having completed the unit by February, 1958, the first question that arises for consideration is whether the new and separate unit has been set up after the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as, to set up a building, a post, a wall, a pillar. To place upright and put together in readiness for use, as in pitching a tent... To assemble and erect in position (a machine)." The dictionary meanings of this expression thus also do not support, or rather speak against, the contention of the learned counsel. In Armitage v. John Haigh Sons Ltd. Lord Esher M. R., Lindley and Bowen L. JJ. concurring, held in relation to the setting up of machines that the words " set up " meant completed. In Ramaraju Surgical Cotton Mills Ltd. v. Commissioner of Wealth-tax, the learned judges have held that this expression means " ready to commence business ". This has been followed in Commissioner of Wealth-tax v. Travancore Cements Ltd. and a similar view has prevailed in K. C. P. Ltd. v. Commissioner of Wealth-tax. There is thus no basis for this contention of the learned counsel for the applicant and the expression " set up " as used in clause (xxi) of section 5(1) means completed or ready to be commissioned or ready to commence business, all of which expressions mean in this context exactly the same. It does not cover the whole process from the commencement of the operations to establish a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Tribunal that in view of the language used in the proviso to section 45(d) of the Act, the only meaning possible that can be given to the second proviso to clause (xxi) of section 5(1) is the one that has been urged by the learned counsel in this application, because while the provisions of section 45(d) are made retrospective by the proviso, that is not the case with regard to clause (xxi) of section 5(1). This was not accepted by the learned Tribunal. Section 45(d) with the proviso, omitting the Explanation which is not necessary here, reads thus : "45. Act not to apply in certain cases.--The provisions of this Act shall not apply to--.... (d) any company established with the object of carrying on an industrial undertaking in India in any case where the company is not formed by the splitting up, or the reconstruction of a business already in existence or by the transfer to a new business of any building, machinery or plant used in a business which was being previously carried on : Provided that the exemption granted by clause (d) shall apply to any such company as is referred to therein only for a period of five successive assessment years commencing with the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he establishment of the unit prior to the advent of the Act, the assessment year next following that date would be the first assessment year under the Act, namely, 1st April, 1957, to 31st March, 1958. This means that the exemption will be available to the assessee only for a period of the first five assessment years under the Act, where, though the unit is set up after the Act, the operations for the establishment commenced earlier than the Act. It seems to us that the scope of the second proviso is quite clear and that there is no need to strain the expression 'set up' occurring in section 5(1)(xxi), because of the language of the proviso." So this argument of the learned counsel for the applicant does not succeed and the assessee-company is entitled to the exemption under clause (xxi), read with the proviso to it, of section 5(1) of the Act. The only matter that remains for consideration is the commencement of the five years, that is to say, the date from which five years are to commence according to the second proviso to clause (xxi) of section 5(1), and the learned counsel for the assessee-company contends that that must be from the first assessment year 1957-58 and the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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