Law:

Section:

Section 40 of the Finance Act, 1983 - Companies - Assessment years 1986-87 to 1988-89 - Assessee, a closely held private company, itself was not carrying on any business and had leased out its factory building to another company which carried on business there - Assessee also owned other lands, not being agricultural lands and motor cars - Assessing Officer assessed all these items to wealth-tax - Whether inclusion of value of lands and motor cars was perfectly justified notwithstanding fact that they were acquired out of assessee's own funds - Held, yes - Whether there is nothing in section 40(3) to warrant exclusion of motor cars on ground that they form part of block of assets for depreciation under section 32 of Income-tax Act, 1961 - Held, yes - Whether it could be said that factory was being used by assessee for purpose of its business - Held, no - Whether, therefore, it was rightly assessed to wealth-tax - Held, yes FACTS The assessee, a closely held private company, took over the assets of a firm and acquired the right to receive rent from factory building which had been leased to another company by the firm. After its formation, the assessee-company entered into a further agreement with the same lessee and renewed the lease. All the machineries installed in the plant belonged to the lessee. The assessee had also permitted the lessee to construct another buildings on the same property. The assessee also owned other lands and motor cars. The Assessing Officer assessed the factory building, the motor cars, as also the lands, which were not agricultural lands to wealth-tax. The Tribunal confirmed the order. On reference : HELD As per the provisions of section 40(3), all the lands other than agricultural lands as also motor cars form part of the taxable wealth and, therefore, inclusion of the value of the lands and motor cars was perfectly justified. The intention of the Legislature is to be ascertained with reference to language employed in the legislation and the context. There is nothing in the text of section 40(3) which would warrant the exclusion of value of assets acquired by a closely held private company with its own funds. Nor is there anything in…

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