Law:

Section:

Section 45(d), read with section 5(1)(xxi) of the Wealth-tax Act, 1957 - Act not to apply in certain cases - Assessment years 1957-58 and 1958-59 - Assessee-company was established in 1924 for manufacture of carpets - In 1955, it expanded its business and put up a new unit for manufacture of worsted wool yarn - During relevant assessment years, it claimed exemption of tax under section 45(d) on ground that said new unit established by it should be interpreted as company for that section - Whether setting up of a new business by an already existing company can, under no circumstances, be equated with establishment of a company - Held, yes - Whether, therefore, section 45(d) was not applicable in case of assessee-company - Held, yes - Whether, moreover, since new unit had been set up by assessee-company in year 1955 i.e. prior to commencement of Act, assessee could not derive any benefit under provision of section 5(1)(xxi) as well - Held, yes FACTS The assessee, company was established in 1924 for the manufacture of carpets. In August, 1955, it 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 claimed before the WTO, that so far as the new unit was concerned, it was entitled to the exemption which was granted to the new companies under section 45(d). The case of the assessee was that the new unit established by them should be interpreted as a company for the purpose of this section. This contention was repelled by the WTO on the ground that the word 'company' had been defined in section 2(h) which meant a company as defined in section 3 of the Companies Act, 1956. By no stretch of imagination could, therefore, according to the WTO, a separate unit be interpreted as a 'company'. The assessee's case for exemption in respect of the separate unit could, according to him, be considered under section 5(1)(xxi), but that sub-section was also not applicable, because the separate unit was set up before the commencement of the Act on 1-4-1957. On appeal the AAC upheld the order of WTO. Further appeal, of the assessee was…

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