Law:

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Section 3 of the Wealth-tax Act, 1957, read with section 40 of the Finance Act, 1983 - Charge of tax - Companies - Assessment years 1984-85 to 1988-89 - Whether Finance Act, 1988, which amended portions of Finance Act, 1983 with effect from 1-4-1989 and extended exemption from wealth-tax, inter alia, to value of a cinema house and value of stock-in-trade, is not retrospective - Held, yes HELD The amendment effected to section 40 of the Finance Act, 1983 by the Finance Act of 1988 with effect from 1-4-1989 is only prospective and not retrospective. [Para 5] The test to be applied for deciding as to whether a later amendment should be given retrospective effect, despite a legislative declaration specifying a prospective date as the date from which the amendment is to come into force is : as to whether without the aid of the subsequent amendment the unamended provision is capable of being so construed as to take within its ambit the subsequent amendment.[Para 8] Applying that test, it is not possible to say that stock-in-trade which is not excluded from wealth-tax in section 40 of the Finance Act, 1983, is nevertheless to be regarded as having been excluded. No part of that section is capable of being given such a construction. [Para 9] Therefore, the Finance Act, 1988, which amended portions of the Finance Act, 1983, and extended the exemption from wealth tax, inter alia, to the value of a cinema house and the value of stock-in-trade, is not retrospective. [Para 13] CASES REFERRED TO CWT v. Varadharaja Theatres (P.) Ltd. [2001] 250 ITR 523 (Mad.) [Para 3], CWT v. Prakashi Talkies (P.) Ltd. [1993] 202 ITR 121(Kar.) [Para 3], CWT v. Vummidi Bangaru Chetty (P.) Ltd. [2002] 254 ITR 332/[2003] 128 Taxman 112 (Mad.) [Para 4], CWT v.Reliance Motor Co. Ltd. [2003] 260 ITR 571 (Mad.) [Para 4], CIT v. Jodhan Real Estate Development Co. (P.) Ltd. [2003] 259 ITR 79/132 Taxman 507 (Raj.) [Para 6] and Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677/ 91 Taxman 205 (SC) [Para 10]. T. Ravikumar for the Appellant. Philip George and P. Senthil Kumar for the Respondent. ORDER R. Jayasimha Babu, J. - The question referred is,- "Whether on the facts and in the circumstances of the…

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