The Commissioner of Wealth Tax vs Smt. Krishna Kapoor L/J of Late Ranbir Raj Kapoor

F.I. Rebello, J.—In both these reference as there is common question, they are being answered by this common order.

The Tribunal has referred the following question.

i) Whether on the facts and circumstances of the case and in law, the Tribunal was right in deleting addition of Rs. 2,28,62,000/- representing the value of assessee''s rights in the films produced by him, by holding that, that right was in the nature of copy right exempt u/s 5(i)(v) of the Wealth Tax Act?

We have heard the learned Counsel. We are concerned with the Assessment Year 1984.85. [of the The Wealth Tax Act,1957] (hereinafter referred to as "Wealth Tax Act). Section 5(i) and (v)" [read] as under.

5(i) Wealth tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee-

(v) the rights under any patent or copyright belonging to the assessee:

Provided that they are not held by him as assets of a business, profession or vocation and no income or benefit accrues to him therefrom;

The Taxation Laws (Amendment) Act, 1975 came into force from 1.4.1976. By virtue of Section 83, proviso to clause (v) was substituted by the following proviso.

Provided that they are held by him in his own right as the inventor or author of such patent or copyright, as the case may be, and have not been assigned to, or acquired by, him under a contract or by way of inheritance or otherwise;

This position continued till it was deleted from 1.4.1976 by Finance Act,1992.

In the instance case, there is no dispute that Raj Kapoor was the owner of the copyright now represented by his L.R. the respondent. Our attention is invited to the order of the Tribunal for the Assessment Year 1981.82 in Wealth Tax Appeal No. 376 of 1987. The Tribunal has relied upon the said order while passing the order for the Assessment Year 1984.85. On a consideration of Para-2 of the judgment we find that the Tribunal applied the Section as it stood, before it was amended. The correct position ought to have been to apply the section as amended by the Taxation Laws (Amendment) Act, 1975. Once we hold that holder of the copyright was the late Raj Kapoor, Section 5(v) of the Wealth Tax Act 1977 as amended would be applicable. Once that is applicable the deletion was lawful.

In the light of the above, question is answered in the affirmative in favour of the assessee and against the revenue.

In Wealth Tax Reference No. 84 of 1998 there was a additional question which reads as under. Without prejudice to the above, whether the Appellate Tribunal was justified in confirming the order of the C.W.T.(A) on the above issue, inspite of the fact that these rights were assigned to the third parties by the assessee?

This issue was considered by the tribunal in the order passed in WIA No. 376 of 1987. The finding given is that rights were given, only for the purpose of exploitation but ownership rights continued to be in the holder of the copyright. The Tribunal therefore, recorded that the right in the copyright is not affected. This is purely a finding of fact. Once a finding has been given that holder of the copyright continues to hold the copyright, the second question in WTR No. 84 of 1998 has to be answered in favour of the assessee and against the revenue.