1967 (3) TMI 25

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....x Act, 1957, in respect of the new section started by it in August, 1955, for the manufacture of worsted wool yarn ? " It has arisen in these circumstances. M/s. Oriental Carpet Manufacturers (India) Private Limited (hereinafter referred to as the company) is a private limited company which was established in 1924 for the manufacture of carpets. In August, 1955, this company expanded its business and put up a new unit for the manufacture of worsted wool yarn and invested a capital of Rs. 8,55,725 therein. With regard to the assessment years 1957-58 and 1958-59, the assessee-company claimed before the Wealth-tax Officer, that so far as the new unit was concerned, they were entitled to the exemption which was granted to the new companies u....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....istant Commissioner, was rightly refused by the Wealth-tax Officer. On appeal to the Appellate Tribunal, vide its order dated 16th October, 1961, it came to the conclusion that section 45 was intended to exclude the new companies from the class of taxable persons and, as the assessee-company was an old company, this section did not apply. The proper section to be applied in this case, according to the Tribunal, was section 5(1)(xxi) which envisaged the expansion of industries by the old companies. But even the benefit of this section was not available to the assessee-company, because the expansion took place prior to the commencement of the Act. The assessee was, therefore, not entitled to the exemption claimed. Thereafter, the assessee mov....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... with the object of carrying on an industrial undertaking. He, however, conceded that the assessee-company could not derive any benefit from the provisions of section 5(1)(xxi), because the unit had been established prior to the commencement of the Act. Sections 5(1)(xxi) and 45(d) read as under: " 5. (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....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d), 'industrial undertaking' means an undertaking engaged in the manufacture, production or processing of goods or articles or in mining or in the generation or distribution of electricity or any other form of power." A plain reading of these sections would show that the expansion of business by an existing company is specifically dealt with in section 5(1)(xxi) and not in section 45(d). Undoubtedly, the industrial undertaking in the instant case comes within the meaning of the Explanation to clause (d) of section 45. The company had set up a new and separate unit by way of substantial expansion of its undertaking. Thus it would be seen that the assessee-company could have claimed the exemption under section 5(1)(xxi) if the unit had bee....