Liberal reading of undefined "factory" allowed cinema theatre wealth-tax exemption, later amendment supporting the interpretation.

Where section 40 of the Finance Act, 1983 used the term "factory" without defining it, the court adopted a liberal construction by looking to the meaning under the Factories Act and treated a cinema theatre as within that concept. The later insertion of cinema theatre in the Finance Act, 1988 was treated as supporting a curative reading of the earlier provision. On that basis, the cinema theatre was held entitled to wealth-tax exemption, and the reference was answered in favour of the assessee.

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Issues: Whether a cinema theatre was entitled to exemption from wealth-tax for the assessment years 1987-88 and 1988-89, and whether it could be treated as a factory under section 40 of the Finance Act, 1983.

Analysis: Section 40 of the Finance Act, 1983 exempted certain categories of buildings used as factory, godown, warehouse, hotel or office, but did not expressly refer to a cinema theatre. The Court held that the expression "factory" in the 1983 provision was not defined and could be understood with reference to the meaning under the Factories Act, under which a cinema theatre fell within the concept of a factory. The subsequent insertion of cinema theatre by the Finance Act, 1988 was treated as supporting a liberal and curative construction of the earlier provision.

Conclusion: The cinema theatre was rightly treated as a factory and was entitled to exemption from wealth-tax; the question was answered in the affirmative and against the Revenue.

Final Conclusion: The reference was disposed of by upholding the assessee's entitlement to wealth-tax exemption in relation to the cinema theatre.

Ratio Decidendi: Where the statutory expression is undefined, a liberal construction may be adopted so that a cinema theatre can fall within the term "factory" for wealth-tax exemption purposes, and a later clarificatory amendment may confirm that interpretation.

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