Commissioner of Wealth-tax vs Varadharaja Theatres Pvt. Ltd.

R. Jayasimha Babu, J.—The Tribunal has held that the cinema building owned by the assessee is entitled to exemption from wealth-tax u/s

40(3)(vi) of the Finance Act, 1983, as it stood during the relevant period, namely, the years 1984-85, 1985-86, 1986-87, despite the fact that

cinema house was not mentioned in that provision and it came to be included therein only after the Finance Act, 1988, was passed and that

amendment was given effect to from April 1, 1989. The Tribunal has taken the view that that amendment was curative and declaratory. That view

of the Tribunal cannot be approved. When Parliament enacts law, the law must be understood with reference to the language used in the provision

construed in the light of the scheme of the Act and the object of the statute and the provisions therein. If with a view to confer a benefit which had

not been conferred before the law was amended that does not necessarily imply that the amendment is to be given retrospective effect even

without a legislative declaration to that effect. Every case of removal of hardship by Parliament does not indicate a parliamentary intention to

remove that hardship from an anterior date unless the scheme of the Act, the context in which the amendment was made and the language of the

amendment warrant such a view. When a thing which was specifically excluded is subsequently included, such inclusion cannot be regarded as

indicative of an intention on the part of the Legislature to have treated what is now included as having been included at all times.

One possible way of testing as to whether an amendment is merely declaratory or is substantive and therefore prospective is to examine the

amended provision with a view to ascertain as to whether that provision without the aid of the amendment is capable of taking within it what was

subsequently included after the amendment. Applying that test to the facts of this case it is clear that Section 40(3)(vi) of the said Act as it stood at

the relevant time was not capable of being construed as including cinema house when what was regarded as business assets had been exhaustively

listed and that list did not include cinema house.

Counsel for the Revenue very fairly brought to our notice the decision rendered by the Karnataka High Court in the case of Commissioner of

Wealth Tax Vs. Prakashi Talkies Pvt. Ltd., wherein that court took the view that the mentioning of cinema houses in Section 40(3)(vi) of the said

Act is to be regarded as only curative and declaratory. Having perused that judgment, with great respect to the learned judges who decided that

case, we are unable to agree with that view. The memorandum explaining the provisions of the amending Act does not support the view that

Parliament intended this amendment to be declaratory. If, as already observed, without the aid of the amendment, it is not possible to treat cinema

houses as exempted from wealth-tax as per unamended provision, the fact that that provision was subsequently amended does not of its own force

make it declaratory.

We, therefore, answer the question referred to us which reads as follows :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in cancelling the orders of the Commissioner passed u/s 25(2) of

the Wealth-tax Act, 1957, on the ground that the theatre building has to be excluded out of the assets included in Section 40(3)(vi) of the Finance

Act, 1983, as it forms part of the business assets of the assessee-company for the assessment years 1984-85, 1985-86 and 1986-87 ?

in favour of the Revenue and against the assessee and hold that for the assessment years from 1984-85 to 1986-87, the cinema house owned by

the assessee was not exempt from wealth-tax u/s 40(3)(vi) of the said Act.