LexTRAVANCORE-COCHIN CHEMICALS (P.) LTD. versus COMMISSIONER OF WEALTH-TAX, KERALA
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TRA VANCORE-COCHIN CHEMICALS (P.) LTD. v. COMMISSIONER OF WEALTH-TAX, KERALA April 6, 1967 [J. C. SHAH, S. M. SIKRI AND V. RAMASWAMI, JJ.J A Wealth Tax Act (27 of 1957), s. 45(d), proviso-Company incorpo- B rated on one date and commencing business on a later date-When "'estab/ished"-Meaning of "estab/ishetf'. The appellant, which was a private limited company, was formed and registered under the Indian Companies Act, 1913, on 8th November, 1951. The erection and construction of its factory was completed in December 1953 and production conunenced from 1-1·1954. On the question whether the company was established on 8th November, 1951, C the date of its incorporation and was therefore liable to pay wealth tax for the assessment years 1957-58, 1958-59 and 1959-60, on the basis that the exemption from payment of wealth tax under the proviso to s. 45d) was only for five successive assessment years commencing with the assessment year next following the date on which the company was established. HELD: A comparison of clauses (d) and (f) of s. 45 shows that D the word "established" in cl. (d) and its proviso, does not mean "in· corporated". The word "established" bas the same meaning it has in s. 5 ( 1 )(xxi) of the Act, namely, that the Company has been put into such a shape that it can start functioning as a business or a manufacturing organisation. So construed, the appellant was established within s. 45(d) only in December, 1953,, or 1st January 1954, and the five assessment years next following would be 1954-55, 1955-56, 1956-57, 1957-58 and 1958·59. Therefore, the appellant would be entitled to exemption for E tho assessment years 1957-58 and 1958-59 but not for 1959-60. [451F; 452D-E; 453B-C] Commissioner of Wealth Tax, Madras v. Ramaraju Surgical Cotton Mills Ltd. [1967] I S.C.R. 761, followed. Thomas !. Davidson v. W. L. Lanier, 18 'L.Ed. 377, 379, ·referred to. CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 405- F 407 of 1966. Appeals by special leave from the judgment and order dated March 9, 1964 of the Kerala High Court in Income Tax Referred Case No. 4 of 1963. S. T. Desai and G. L. Sangh1', for the appellant (in all the appeals). G T. V. Vishwanatha l,ver, Gopal Singh, S, P. Nayyar and R. N. Sachthey, for the respondent (in all the appeals). The Judgment of the Court was delivered by Sikrl, J. These appeals by special leave are directed against the judgment of the High Court of Ker~la in a reference made H to it by the Income-Tax Appellate Tribunal, Madras Bench, under s. 27(1) of the Wealth Tax Act, 1957, hereinafter referred to as the Act. The reference was made a• the instance of the •• .. A B c D E F G H T. C. CHEM. LTD. V. COMMR. W. TAX (Sikri, J.) 449 Commissioner of Wealth Tax, Kerala, and the question referred was as follows :- "Whether the exemption from tax for the assess- ment years 1957-58, 1958-59 and 1939-60 was not rightly granted." The High Court held that the exemption from tax granted to the assessee under s. 45 ( d) of the Act for the assessment years 1957-58, 1958-59 and 1959-60 was not rightly granted and answered the question against the assessee. The relevant facts are as follows :-The appellant, Travancore Cochin Chemicals (P) Ltd., hereinafter called the assessee, was formed and registered under the Indian Companies Act on November 8, 1951. The prior history of the Company is given in the state- ment of the case as follows :- "On 22-7-1949, a partnership was formed between two public limited companies, viz., Fertilisers & Chemi- cal Travancore Ltd., Alwaye, and the Mettur Chemical & Industrial Corporation Ltd., Mettur, for establishing a Caustic Soda Factory with an estimated capital of Rs. one crore. The firm could not function due to lack of finance. The Government of Travancore was approached for necessary finance to complete the pur- chase of plants and machinery which had been started in August 1949, and that Government entered the Company and subscribed a large share capital and a new private limited company was formed and register- ed under the Indian Companies Act on 8-11-1951." Further facts given in the statement of the case are as follows :- "This new company took over the plant, machinery, buildings, construction stores, materials, etc., at different stages of erection and also all book debts and liabilities. The erection and construction of the factory was com- pl
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