ORDER
Per Shri Anand Prakash, Accountant Member - These appeal are taken together as one of the grounds of appeal is common in all of them and, for the sake of convenience, these are disposed of by this common order.
2. The controversy which is common in respect of all the years is with regard to the valuation of the property situated at B-34, Greater Kailash, New Delhi. Up to the assessment year 1968-69, the said property was under the personal occupation of the assessee. Thereafter, one floor of it has been let out. The contention of the assessee before us is that the said property should be valued both by land and building method, but by applying the yield method. In support of it, he has relied upon the decision of the Honble Calcutta High Court the case of Sudesh Chandra Talwar dated 5-3-1981 in Matter Nos. 670, 671, 657, 656, 655 and 672 of 1977 (a copy of the unreported judgement has been placed on record).
In the above case also the facts were similar and the decision of this Lordships was that rental method was the best method to value such property.
3. On behalf of the revenue, the above submission was resisted and it was pointed out that no principle of valuation could dictate taking up of valuation at an unrealistic figure and that could be no better evidence of the value of a certain property than the sale price of the property itself. According to the learned departmental representative, the property under consideration came to be sold in January 1976 for Rs. 6,50,000 and, therefore, if the value of the property is worked back for January 1976, the valuations adopted and sustained by the learned AAC and detailed as below, would not be found to be unrealistic :
'Assessment year
Rs.
1964-65
3,16,000
1965-66
3,41,000
1966-67
3,66,000
1967-68
3,91,000
1668-69
4,16,000
1969-70
4,41,000
1970-71
4,66,000
1971-72
4,91,000
1972-73
5,16,000
1973-74
5,41,000
1974-75
5,66,000'
In rejoinder, the learned counsel for the assessee submitted that the property when it was sold in January 1976 had become vacant and, therefore, the price which it fetched in January 1976 would not be proper index of its value when it was under the occupation of the tenant.
4. After carefully examining the rival submission and the facts of the case, we are of the opinion that the present case is directly covered by the ratio of the Special Bench decision of the Tribunal in the case of Biju Patnaik v. WTO in WT Appeal Nos. 614 to 624 and 703 and 717 (Delhi) of 1979, dated 17-2-1981 [since reported in [1983] 3 ITD 693] wherein our learned brothers had stated that rule 1BB of the Wealth-tax Rules, 1957 would cover self-occupied property as well as residential property let to hire, and that there was a positive concession given through this rule in respect of the valuation of a residential property including self-occupied property and, therefore, the WTO was obliged to value the said property in accordance with rule 1BB rather than to go by the real market price. In view of the aforesaid finding of the Special Bench of the Tribunal, which is binding on us, we direct that the value of the building in question should be re-computed by the WTO by adopting rule 1BB. If the result of such computation, however, is that the value of the property would be less than the value shown by the assessee in his return, the figure returned by the assessee may be adopted, for it has not been the prayer of the assessee before us, nor is it a ground of appeal that the value should be taken at a figure less than that return by the assessee in his welath-return.
5. The second ground of appeal is only in respect of the assessment years 1968-69 to 1974-75 and it pertains to the exemption to be granted to the assessee in respect of the shares held by it in an industrial undertaking to which, according to the assessee, the provision of clause (xx) of sub-section (1) of section 5 of the Wealth-tax Act, 1957 (the Act) applied. The said clause reads as follows :
'(1) Subject to the provision of sub-section (1A), 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 -
** ** **
(xx) the value of any equity held by the assessee in any company of the type referred to in clause (d) of section 45, where such shares form part of the initial issue of equity share capital made by the company after 31st day of March, 1964, but before the 1st day of June, 1971 for a period of five successive assessment years commencing with the assessment year next following the date on which such company commences the operation for which it has been established;'
Clause (d) of section 45 of the Act to which reference has been made above, may also be noted at this stage. It reads as follows :
'45. No tax shall be levied under this Act in respect of the net wealth of -
** ** **
(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 a business which was being previously carried on :'
6. The contention of the assessee was that the shares held by him in Indo-Japan Steels Limited were exempt under the aforesaid clause (xx) of sub-section (1) of section 5 as the said shares formed part of the initial issue of shares by the said company, and that the said company was of the type mentioned in clause (d) of section 45. The above plea of the assessee was, however, negatived by the WTO by pointing out that the provision of clause (d) of section 45 were not fulfilled by the manufacturing box strapping and that, for this purpose it had acquired machinery from Grand Smithy Works. According to the WTO, though the machinery installed cold mill and hot mill were new, yet the furnace plant was used by Grand Smithy Works in its business previously. All the machines of Grand Smithy Works were transferred to the new company along with factory building, furniture, equipment and many other items, The WTO further pointed out that the funds raised out of the issue of equity shares were not utilized for the acquisition of the new machineries by Indo-Japan Steels Ltd. For all these reasons he felt that the benefit under clause (xx) of sub-section (1) of section 5 could not be available to the assessee.
7. The aforesaid order of the WTO was challenged before the AAC. It was pleaded that the provision of clause (d) of section 45 were identical to those of sub-section (4) of section 80J of the income-tax Act, 1961, (the 1961 Act) and that inasmuch as the company Indo-Japan Steels Ltd. had been granted exemption under section 80J, there is no justification in not treating the said company as of the type mentioned in clause (d) of section 45. If the company was so treated, the exemption to the assessee would clearly be available in terms of clause (xx) of sub-section (1) of section 5.
8. The learned AAC was, however, not impressed with the above line of reasoning and he rejected contention by observing, inter alia, as follows :
'Indo-Japan Steels Limited has no doubt set up a new business. But along with some plants, some old machineries used previously in another business have been acquired by it. Therefore, the conditions of section 45(d) in my opinion have not been fulfilled in this case ...'
9. The assessee assails the above finding of the learned AAC and repeats before us the same reasoning as was advanced by him before the learned AAC and submit that when the provision of section 80J were held to be applicable to Indo-Japan Steels Ltd., it could never be said that the said company was not of the type mentioned in clause (d) of section 45, more particularly when the wordings of clause (d) of section 45 were identical to those of sub-section (4) of section 80J of the 1961 Act. The learned counsel stressed before us that the broad scheme of the two Acts, namely, the 1961 Act and the Act was to encourage new industrial undertakings and also to encourage investment in the shares of such undertaking and for that purpose whereas the income of the company in question was granted relief in terms of section 80J, the shareholders were granted identical relief under section 80K of the 1961 Act. Under the Act also, similar treatment was intended to be meted out to the company as well as to the shareholders. The company was exempted from tax under clause (d) of section 45, whereas the shareholders were granted exemption in terms of clause (xx) of sub-section (1) of section 5. It would, therefore, not be proper at all to grant exemption to the company and to the shareholders under the 1961 Act but not to grant the same to company under the Act.
10. On behalf of the revenue, the orders of the authorities below were stoutly supported.
11. We have given our careful consideration to the contentions raised above. Whatever might be the broad scheme of the two Acts, we have to go by the specific language used by the Legislature to effectuate its will and it may not always be correct to go by the principle that relief under the Act should be granted relief the 1961 Act had been granted under an analogous provision, ignoring in the process the specific language of the statute. The two Acts are distinct and have distinctive field of operation and, therefore, the intention of the Legislature of the granting certain relief has to be inferred form the specific language of the section granting such exemption rather than from general scheme which the Legislature, according to the assessee, wanted to effectuate. For the sake of comparison, it will be convenient to extract the relevant provisions of the Acts as below :
'Sub-section (4) of section 80J of the Income-tax
Clause (d) of section 45 of the Wealth-tax Act
(4) This section applies to any industrial undertaking which fulfills all the following conditions, namely :
(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 extistence or by the transfer to a new business of any building, machinery or plant used in a business which was being previously carried on :
(i) it is not formed by the the reconstruction, of a splitting business already in existence up the or existence;
(ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose;
(iii) it manufactures or produces articles, or operates one or more cold storage plant or plants, in any part of India, and has begun or begins to manufacture or produce articles or to operate such plant or plants, at any time within the period of thirty three years next the following the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking;
(iv) in case where the industrial undertaking manufactures or produces articles, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more works in a manufacturing process carried without the aid of power :
Provided that the condition in clause (i) shall not apply in respect of any industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by them assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section :
Provided further that, where any building or any part thereof previously used for any purpose is transferred to the business of the industrial undertaking, the value of the building or part so transferred shall not be taken into account in computing the capital employed in industrial undertaking :-
Provided also that in the case of an industrial undertaking which manufactures or produces any article specified in the list in the Eleventh Schedule, the provision of clause (iii) shall have effect as if for the words thirty-three years, the words thirty-one years had been substituted.
Explanation 1 : For the purpose of clause (ii) of this sub-section, any machinery or plant which was used outside India by any person other than the assessee shall by any regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely :-
(a) such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India;
(b) such machinery or plant is imposed into India from any company outside India; and
(c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provision of the Indian Income-tax Act, 1922 (11 of 1922), or this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee.
Explanation 2 : Where in the case of an industrial undertaking any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty percent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with and the total value of the machinery or plant or part so transferred shall not be taken into account in computing the capital employed in the industrial undertaking.'
A careful comparison of the two would show that in certain respect clause (d) of section 45 of the Act has a wider coverage than sub-section (4) of section 80J of the 1961 Act, and in other respect sub-section (4) of section 80J has wider coverage than clause (d) of section 45. Thus, for example, the restriction of manpower put in clause (iv) of sub-section (4) of section 80J is not be found in clause (d) of section 45. The wordings in a business which was being previously carried on do not appear in clause (ii) of sub-section (4) of section 80J, wherin the wordings used are previously used for any purpose.' Then the provisos (i) and (ii) and Explanations 1 and 2 which extend the meaning of the words plant, machinery or plant previously used for any purpose do not appear in clause (d) of section 45. For example, Explanation 2 to sub-section (4) of section 80J provides that 'where in the case of an industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty percent of the total value of the machinery or plant use in the business, then, for the purposes of clause (ii) of this sub-section the condition specified therein shall be deemed to have been complied with ...'. There is no corresponding provision under the Act. Similarly, proviso 1 stipulates that 'the conditions in clause (i) shall not apply in respect of any industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of the any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section'. Proviso 2 also visualizes the transfer of building or any part thereof previously used for purpose to the new industrial undertaking. None of these provision are contained in clause (d) of section 45. Therefore, the argument of the learned counsel for the assessee that the exemption under clause (xx) of sub-section (1) of section 5 should be granted invariably in every case to which the benefit of section 80J is available does not appear to us to be correct and we, accordingly, reject it. In the present case, it has not been denied by the assessees learned counsel that the plants, machinery and building of Grand Smithy Works were transferred to the assessee-company at the time of its formation. What is, however, pointed out by him is that the value of such assets is hardly Rs. 24,70,962, out of the total assets of the company at Rs. 1,20,76,733 (see page 35 of the paper book). The above arguments of the assessee might have had some meaning for the purpose of Explanation 2 to sub-section (4) of section 80J but it has no relevance to the language of clause (d) of section 45 of the Act. This being an admitted position, viz., that the assessee-company has been formed by the transfer to a new business of building, machinery and plant used in the business of Grand Smithy Works, which was being previously carried on, the relief contemplated by clause (xx) of sub-section (1) of section 5 would not, in our opinion, be available to the assessee-company. Accordingly, we reject the assessees claim on this account.
12. In the result, the assessees appeals for the assessment years 1964-65 to 1967-68 are allowed in full, whereas the appeals for the assessment years 1968-69 to 1974-75 are allowed in part.