1965 PLP 81 (PTD)

"'assessment year' means the year for which tax is chargeable under section 3." The second contention on behalf of the assessee is that every financial year is not an "assessment year" and that a year "for which tax is chargeable under section 3" means a year of actual liability to pay a certain amount by way of tax under the Act. The Schedule to the Wealth-tax Act, 1957, specifies the rates of wealth-tax. Part II of that Schedule says: "In the case of every company: Rate of tax (i) on the first rupees five lakhs of net wealth Nil. (ii) on the balance of net wealth half percent. Provided that in the case of a company which has incurred a net loss in any year computed in the manner hereinafter provided and which has not declared any dividend on its equity capital in respect of that year, the rate of tax for the relevant year shall be nil." It is submitted on the basis of this provision that the first assessment year in which the company was actually liable to pay any amount by way of wealth-tax was the assessment year 1955-56 and that as a result the exemption is available till the close of the assessment year 1959-60. We are unable to agree. Section 3 of the Act says: "Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of April 1957, a tax (hereinafter referred to as wealth-tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule". An actual liability to pay an amount by way of tax is not what is material. Tax is "chargeable" for every financial year commencing on and from the 1st April 1957, even though on the application of the charge no financial liability accrues to the assessee. The third and the last contention urged on behalf of the assessee is based on the definition of "valuation date" occurring in section 2 (q) of the Act. That definition is: "'valuation date' in relation to any year for which an assessment is to be made under this Act, means the last day of the previous year as defined in clause (ii) of section 2 of the Income-tax Act if an assessment were to be made under that Act for that year: Provided that where in the case of an assessee there are different previous years under the Income-tax Act for different sources of income, the valuation date for the purposes of this Act shall be the last day of the last of the previous years aforesaid." The material portion of the definition of "previous year" in section 2 (11) of the Indian Income-tax Act, 1922, reads as follows: "`previous year' means- (i) in respect of any separate source of income, profits and gains- . . . . (c) Where a business, profession or vocation has been newly set up in the financial year preceding the year for which assessment is to be made, the period from the date of the setting up of the business, profession or vocation to the 31st day of March next following . . . ." The contention is that the setting up of the business of a company is different from the registration of that company, that the company can be considered to have "set up" its business only in December 1953, when its factory was constructed, that the first assessment year for the purposes of the exemption will be 1954-55, and that the exemption granted for the first two of the three years mentioned in the question referred, 1957-58 and 1958-59, can in any case be sustained. We see no force in this contention. Any investigation regarding "valuation date" and "previous year" is unnecessary for the application of section 45(d). All that is necessary is to find out the date of registration and the financial year next following. In this case the date of registration was the 8th November 1951, and the financial year next following, 1952-53. It must follow that the five years in respect of which the exemption is available are 1952-53 to 1956-57, both years inclusive. In the light of what is stated above we must hold that the exemption from tax granted to the assessee under section 45 (d) of the Act for the assessment years 1957-58, 1958-59 and 1959-60 was not rightly granted and answer the question referred against the assessee and in favour of the Department. We do so; but in the circumstances of the case without any order as to costs. A copy of this judgment under the seal of the High Court and the signature of Registrar will be forwarded to the Appellate Tribunal as required by subsection (6) of section 27 of the Wealth tax Act, 1957.