2000 (2) TMI 212 - AT - Wealth-tax

Amendment to Finance Act: Prospective Application of Exemption Rule

TI & M. Ltd. Versus Assistant Commissioner Of Wealth-tax

TI & M. Ltd. Versus Assistant Commissioner Of Wealth-tax - [2001] 247 ITR (A. T.) 15, ITD 73, 180, TTJ 68, 145, Issues Involved:1. Retrospective application of the amendment to Section 40 of the Finance Act, 1983.2. Exemption of certain buildings used by the assessee for residential accommodation of employees from wealth-tax.Detailed Analysis:1. Retrospective Application of the Amendment to Section 40 of the Finance Act, 1983:The appellant-company contended that the amendment made by the Finance Act, 1988 to Section 40 of the Finance Act, 1983 should be applied retrospectively. The amendment extended the exemption to buildings used for the residence of employees without any restriction on the salary paid to such employees. The appellant argued that this amendment was intended to remove unintended hardships caused by the original enactment and, therefore, should be effective from the date of the original enactment.The Tribunal examined the provisions of Section 40 of the Finance Act, 1983, which revived the levy of wealth-tax on companies. It was noted that the section included substantive provisions related to the rate of tax, the net wealth of the company, and the assets and debts considered for valuation. The Tribunal emphasized that unless an amendment specifically states that it is to be applied retrospectively, it should be considered effective from the date indicated in the amendment. The Tribunal referenced the Supreme Court's decision in Allied Motors (P.) Ltd. v. CIT, which stated that a statute is generally intended to have retrospective operation if it is curative or declaratory of the previous law. However, the Tribunal concluded that the amendment made by the Finance Act, 1988 was not curative or declaratory but substantive, and thus, it should be applied prospectively.2. Exemption of Certain Buildings Used by the Assessee for Residential Accommodation of Employees from Wealth-Tax:The appellant-company used buildings 'Gagan Deep' and 'Rockdale' to house employees earning salaries in excess of Rs.10,000 and 'Woodlands' as transit accommodation for employees on official visits. The original sub-clause (vi) of Sub-section (4) of Section 40 of the Act exempted buildings used as residential accommodation for employees whose income chargeable under the head 'Salaries' was Rs.10,000 or less. The Finance Act, 1988 amended this sub-clause to include buildings used as residential accommodation for employees without the salary restriction.The Assessing Officer (AO) and the Commissioner of Wealth-tax (Appeals) (CWT(A)) rejected the appellant's claim for exemption, stating that the buildings used by employees earning more than Rs.10,000 did not qualify for exemption under the original provision. The Tribunal upheld this view, stating that the amendment to the substantive provision of Section 40 made by the Finance Act, 1988 was operative prospectively from April 1, 1988, and could not be applied retrospectively to the assessment year under appeal.The Tribunal concluded that the appellant's claim for retrospective application of the amendment was not tenable. The appeal was dismissed, and the decision was in favor of the revenue.