Income Tax Appellate Tribunal - Mumbai
Garware Wall Ropes Ltd. vs Addl. Cit, Spl. Rg. 26 on 21 January, 2003
Equivalent citations: [2004]89ITD221(MUM), (2004)83TTJ(MUM)322
ORDER
M.K. Chaturvedi, VP
1. These three appeals by the assessee rotate around the identical issue. For the sake of convenience, these are consolidated and disposed of by a common order.
2. The solitary issue raised in these appeals relates to the question that whether the value of helicopter used for the purpose of assessee's business is exigible to wealth-tax.
3. We have heard the rival submissions in the light of material placed before us and precedents relied upon. Assessee is owning a helicopter. This was used for the purposes of the assessee's business. Assessee did claim depreciation on the said helicopter. It was allowed. Further it was stated that there was no disallowance in the income-tax assessments on account of the personal user of the helicopter. Our attention was invited on the language of Section 2 (SIC). This is reproduce here as under:
"'Assets', in relation to the assessment year commencing on the first day of April, 1993, or any subsequent assessment year, means-
(i) .....
(ii) .....
(iii) .....
(iv) Yachts, boats and aircrafts (other than those used by the assessee for commercial purposes)".
4. The main plank of learned departmental representative's argument was that the intention of the statute for using the words "used for commercial purposes" means that the aircraft is used for running on hire. Only then such aircraft is not to be considered for wealth-tax. In our opinion, this proposition cannot be accepted. It is nowhere laid down in the statute that "used for commercial purposes" means that aircraft must be used for running on hire.
5. The term "commercial purpose" is not defined in the Act. As per the Attorneys' Pocket Dictionary, 'commercial' means anything pertaining or connected with trade, traffic and commerce in general. As per the Black's Law Dictionary, the word 'commercial' relates to or is connected with trade and traffic or commerce in general; is occupied with business and commerce.
6. In the case of Amalgamated Electricity Co. Ltd. v. State of Rajasthan and Ors., AIR (1983) Raj. 154, Hon'ble Rajasthan High Court has held that premises used for commercial purpose means premises used for the purpose of business, which entails the element of profit and loss to a person. If certain premises are used for doing a business, the object of which is to make a profit, it would certainly amount to use of such premises for commercial purpose. It was further held that "commercial premises" means nothing more than premises used for the purposes of business. The word 'commercial' according to Oxford Dictionary, means viewed as a matter of profit or loss. The word 'purpose' means object, which is in view or for which it is made. The term "commercial purpose", therefore, means an undertaking, the object of which is to make a profit out of such undertaking. Random House Dictionary of English language also states as one of the meanings of the term 'commerce' as business.
7. Hon'ble Finance Minister in his budget speech at para 67 (194 ITR - statute - 1, 21) has said that there is no distinction at present between productive and non-productive assets. The Chelliah Committee has suggested that, in order to encourage the taxpayers to invest in productive assets, such as shares, securities, bonds, bank deposits, etc. and also to promote investment through mutual funds, these financial assets should be exempted from wealth-tax. Wealth-tax should be levied on individuals, HUFs, and all Companies only in respect of non-productive assets, such as residential houses including farm houses and urban land, jewellery, bullion, motor cars, planes, boats and yachts, which are not used for commercial purposes.
8. It was submitted by learned counsel for assessee that an aircraft, which is used by the assessee for commercial purposes, is not covered by the definition of 'assets' Under Section 2(ea). It may be noted that Section 2(ea)(i) uses the term "commercial purposes" with reference to a building. This clause provides that a building or land appurtenant thereto, whether used for residential or commercial purposes, is to be considered as an asset. However, any house used for residential or commercial purposes, which forms part of stock-in-trade is excluded from the definition. Further, Section 2(ea)(ii) provides that motor cars will be considered as 'assets' but motor cars, which are used by the assessee in the business of running them on hire or as stock-in-trade, are excluded from the definition of "motor cars". The said clause reads as under:
"Motor cars (other than those used by the assessee in the business of running them on hire or as stock-in-trade)".
9. The wordings in Section 2(ea) makes it clear that there is difference between the term "commercial purposes" and the term "used by the assessee in the business of running them on hire". Wherever Legislature wanted that a particular asset should be used for hire for claiming exemption, they have specifically mentioned this fact (e.g. Section 32 of the Income-tax Act). In other cases, the term "commercial purposes" has been used to indicate that the asset should be used for the purpose of business and there is no condition that it should be let out on hire. The term "commercial purpose" has to be distinguished from "personal purposes". In other words, if the aircraft, i.e. helicopter is used for personal purposes, it will be liable to wealth-tax. If it is used for "commercial purposes", i.e. for business purposes, it will be exempt.
10. Interpretation postulates the search for the true meaning of the words used in the statute. If the language of the statute is plain, obvious meaning is to be applied. Rules of interpretation are applied only to resolve the ambiguities. The object and purpose of interpretation is to ascertain the MENS LEGIS, i.e. the intention of the law, as evinced in the statute. The key to the opening of every law is the reason and spirit of law. To be literal in meaning is to see the body and miss the soul. The judicial key to interpretation is the composite perception of the DEHA (body) and the DEHI (soul) of the provision.
11. In the present case, we find that there is no ambiguity in the provision. Conflict was caused because of the interpretation of the term "commercial purpose". The meaning assigned by the revenue to the term "commercial purpose" is alien to the statute. In the case of Amalgamated Electricity Co. (supra), it was held that if the asset is used for doing a business, the object of which is to make a profit, then the asset is used for commercial purposes. It is nowhere laid down that in order to satisfy the requirement of commercial purposes, aircraft should be used as air taxi. One can use it for his own business also to meet the exigencies of the business. Admittedly, it was treated as business asset. The depreciation was allowed on the same. As such, it can be said that the helicopter was used for commercial purposes. It is therefore beyond the ken of wealth-tax. We direct the AO to delete the addition made on this count.
12. In the result, appeals of the assessee stand allowed.