9911796707
TMI Blog1967 (7) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ,996, representing the value of stationary wire ropes and crab winches, tube-wells, water-supply plant, grinding machines and vehicles of conveyance, and (d) a sum of Rs. 76,30,385, representing the amount of taxation liability not actually assessed before the valuation date, should be excluded from the value of the wealth of the assessee, respectively under sections 2(e)(ii), 5(1)(ix) and 2(m) of the Wealth-tax Act. The Wealth-tax Officer disallowed the claim. The assessee appealed before the Appellate Assistant Commissioner, who overruled the claims in respect of residential quarters, electrical machinery (non-factory) and taxation liability, but allowed the claim of the assessee in so far as it concerned Rs. 3,58,996, relating to stationary wire ropes, crab winches, tube-wells, water-supply plant, grinding machines and vehicles of conveyance. Dissatisfied with the order of the Appellate Assistant Commissioner, the assessee appealed before the Appellate Tribunal. The revenue did not prefer any appeal but, shortly before the hearing of the appeal, filed a petition stating that the Appellate Assistant Commissioner was wrong in allowing exemption of Rs. 3,58,996, being the value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 49, dated September 29, 1956, before the expiry of the valuation date, November 30, 1956, for Rs. 30,724. The balance of Rs. 8,374, therefore, represents not only a liability of the assessee but also a debt 'owed by the assessee' within the meaning of section 2(m) of the Wealth-tax Act. With regard to the rest of the amount claimed by the assessee it is conceded that there was no assessment much less a demand for taxes due to the Central or Provincial Governments, before the valuation date and, therefore, it cannot be allowed as a debt owed by the assessee within the meaning of section 2(m) of the Wealth-tax Act." The application made by the revenue for correction of the alleged error of the Appellate Assistant Commissioner in allowing Rs. 3,58,996, claimed by the assessee as the value of the stationary wire ropes, etc., was dismissed by the Tribunal on the ground that the same was outside the subject-matter of the appeal and, therefore, beyond the scope of section 24(5) of the Wealth-tax Act. Against the order of the Tribunal, the assessee and the revenue both applied for a reference to this court on certain points. Thereupon, the Tribunal referred the following questions at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion with the land. The first condition specifies the person who can claim exclusion. The second, third and the fourth conditions specify the character of the building which can be exempted. In the instant case, there is no dispute that condition (2) is satisfied. The dispute is, firstly, whether the assessee, an incorporated company, fulfils the description of a cultivator, and secondly, whether the assessee, an incorporated company, requires or can require the quarters for its dwelling-house. If the assessee is a cultivator and requires the quarters as its dwelling-house, there is no dispute that the requirement is by reason of its connection with the cultivated land. Now, the word "cultivate" means to till or produce by tillage. Thus, a cultivator is a person who tills the soil and produces crops by tillage. The process of cultivation need not be carried on by the cultivator personally. He may do so by himself, by members of his family, by servants or labourers or with the aid of partners. "Raiyats", in this country, are indisputably cultivators and the definition of "Raiyat" in the Bengal Tenancy Act (Act VIII of 1885) indicates the meaning in the following language : "Raiyat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not to exceed 10% of the total income of the owner." In dismissing the claim of the assessee, Calcutta Stock Exchange Association Ltd., for relief under section 9(2), proviso of the Indian Income-tax Act, Lort-Williams J. (Jack J. agreeing with him) observed : "In my opinion, the word 'residence' in its simple and ordinary meaning signifies the place where a human being eats, drinks and sleeps or where his family and servants eat, drink and sleep, and where there is some permanence or continuance of such eating, drinking and sleeping, and the statement of Bayley J. in the case of King v. Inhabitants of North Curry, is in my opinion, an authority for that proposition. In that case, the learned judge said that 'where there is nothing to show that it is used in a more extensive sense, the word 'residence' denotes the place where an individual eats, drinks and sleeps, or where his family or his servants eat, drink and sleep'. It is true that in certain circumstances and in certain statutes, a more extended meaning has been given to the word; for example, it has been held that a limited liability company can 'reside' for the purpose of income-tax legislation. That was decided by Lor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 2(1)(c) of the Indian Income-tax Act, which defines "agricultural income" and section 4(3)(viii), which exempts agricultural income from the computation of income-tax. Section 2(1)(c) is almost in pari materia with section 2(e)(ii) of the Wealth-tax Act and reads as follows : "2. (1) 'agricultural income' means--. . . . . . (c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator, or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any operation mentioned in sub-clauses (ii) and (iii) of clause (b) is carried on : Provided that the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator or the receiver of the rent-in-kind by reason of his connection with the land, requires as a dwelling-house, or as a store-house, or other out-building." Dr. Pal drew our attention to a Full Bench decision of Patna High Court, explaining the above quoted-proviso, in Rajendra Narayan Bhanja Deo v. Commissioner of Income-tax. In that case, the assessee, the Raja of Kanika, owned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of the legislature, one would have expected to find in the Act a set of guiding principles. On the other hand, for assessing the revenue of a business, the Act provides elaborate guides. For this reason, I am of opinion that the legislature had no such intention as suggested by the department. But, apart from this consideration, the words of the proviso are not capable of the construction suggested. The word 'requires' means that the assessee demands to appropriate the building for the purpose of a dwelling-house or as a store-house or other out-building and the words 'by reason of his connexion with the land' mean that only the fact of his being a receiver of rent or revenue or the fact of his being cultivator or the fact that he is a receiver of rent-in-kind entitled him to claim any building as a dwelling-house, a store-house or an out-building. If he should not occupy any of these positions in connexion with the land he is not entitled to claim, as tax free, accommodation of the kind specified. In other words, the expression 'by reason of his connexion with the land' is merely used to explain the nature of the class of persons entitled to exemption. It has been said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td., case that a company resides in a house for taxation purposes within its extended meaning, that is to say, that it does business from that place. But apart from that, it does not reside far less dwell in a house or in a particular place. The word "dwelling-house", when used in its application to the dweller, means his home, where the dweller requires to reside as a natural-born man. That is not the requirement of an artificial person like a company and the company does not require a dwelling house in the sense of making its home. In the instant case, we find that the registered address of the assessee is No. 2, Netaji Subhas Road, in the town of Calcutta. That is the place from where it carries on its business and that may be its residence for taxation purposes. The staff quarters of the assessee, built in its tea gardens, far away from its registered address, are not its dwelling-house or residence in any sense. Thus, although the assessee-company may require the staff quarters by reason of its connection with the land, they cannot be regarded as its dwelling house, residential place or home. Dr. Pal argued that the use of the word "owned" inserted between the words "his" and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural implements or as synonym of 'tools'". If by the above meaning, power-driven and mechanised tools and implements of agriculture were sought to be excluded, the meaning given in Murray's Dictionary must be treated as somewhat primitive and out of tune with modernism. Today, tools and implements of agriculture include all instruments used in ancient times and in modern times, e.g., bullock-drawn ploughs, manually operated spades, shovels and sickles as well as power driven tractors, earth-movers, mechanism for irrigating fields and lifting water by electrically operated water pumps from deep tube-wells, mechanical sprayers and insecticidal instruments, etc. Thus, if electrical transformers and switch gears supply energy for raising agricultural produce, they will be implements used for raising agricultural produce. But plant and machinery used in plantations in connection with the processing of any agricultural produce or in manufacture of any article from such produce (after such agricultural produce has been raised and collected from the ground) will not qualify for exemption under section 5(1)(ix) of the Wealth-tax Act. In this case, as already stated, we have the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner allowed the claim of the assessee in respect of stationary wire-ropes, etc., valued at Rs. 3,58,996. Thus, the point was not before the Tribunal and was not the subject-matter of section 24(5) of the Wealth-tax Act, which reads as follows : "24. (5) The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and any such orders may include an order enhancing the assessment or penalty." Explaining a somewhat analogous provision in section 33(4) of the Indian Income-tax Act, Chagla C. J. observed in the case of New India Life Assurance Co. Ltd. v. Commissioner of Income-tax : "The expression 'thereon' has come in for considerable judicial comment and observation and the authorities lay down that the power of the Tribunal is confined to dealing with the subject-matter of the appeal and the subject-matter of the appeal is constituted by the grounds of appeal preferred by the appellant. This subject-matter cannot be expanded even by the appellant unless leave is granted to him to do so by the Appellate Tribunal. The subject-matter can certainly not be expanded by the respondent, as already po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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