Judgment 1. Under Sec.271(1) of the Wealth Tax Act (Central Act 27 of 1967)--hereinafter called the Act--the Appellant Income-tax Tribunal, Patna Bench, has referred to this Court the following question of law: "Whether in the facts and circumstances, the assessee company was a company established with the object of carrying on an industrial undertaking in India and was as such entitled to exemption from wealth tax under Sec. 45(d) of the Wealth Tax Act?" The facts stated in the statement of ease are these. The assessee is a foreign company operating in India in the name of Heckett Engineering Co. (India Branch), Division of Harsco Corporation (U.S.A.). For the wealth tax assessment for the year 1959-60 (the valuation date being 31-12-1958) the total net wealth of the company taxable under the Act was Rs. 29,85,115. There is no dispute as to the quantum of this valuation. Although, as it appears from the copy of the assessment order passed by the Wealth Tax Officer. Jamshedpur, no claim of exemption was made by the assessee company before him under Sec. 45(d) of the Act, such a claim was made before the Appellate Assistant Commissioner in appeal. It was, however, rejected by him on the ground that the assessee is not a company which is entitled to the exemption aforesaid. The same view was taken by the Appellate Tribunal when the assessee went up in further appeal before it. 2. The argument put forward on behalf of the assessee by Mr. Rajeshwari Prasad, its learned counsel, is that the assessee is a company within the meaning of Sub-clause (ii) of Clause (h) of Sec.2 of the Act and hence, in terms, it is entitled to the exemption provided in Clause (d) of Sec. 45, inasmuch as the company established its place of business in India in the year 1956 with the object of carrying on an industrial undertaking in India or, in any view of the matter. It was a company established with the object of carrying on an industrial undertaking in India at the time of its incorporation in the United States qn the 28th of February 1956 Counsel submitted that both the periods aforesaid were within the exemption limit of five successive assessment years as provided in the proviso to Clause (d) of Sec. 45 of the Act. The learned Standing Counsel for the department combated this argument and submitted that the fact of establishment of a place of business by the assessee company in India for carrying on an industrial undertaking is not one which would attract the provisions of exemption and the company was not established, that is to say, incorporated in the United States, with the object of carrying on an indus trial undertaking in India within the meaning of exemption clause. 3. Sec.2(h) says : "(h) Company means a company as defin ed in Sec.3 of the Companies Act, 1956, and includes: (i) a company within the meaning of any law in force in the State of Jammu and Kashmir relating to companies: and (ii) a company incorporated outside India which has a place of business in India." Under Section 8 of the Act, the wealth of the foreign eompany which has a place of business in India would be taxable. Sec. 45 of the Act provides: 45. Sec. 45 of the Act provides: 45. The provisions of this Act shall not apply to- (a) a banking company as defined in Sec. 5 of the Banking Companies Act, 1949; (b) an insurer within the meaning of the Insurance Act, 1938; (c) any company established with the object of financing whether by way of making loans or advances to, or subscribing to the capital of, private industrial enterprises in India, in any case where the Central Government has made or agreed to make to the company n special advance for the purpose or has guaranteed or agreed to guarantee the payment of moneys borrowed by the company from any institution outside India; (d) any company established with the object of carrying on an industrial undertaking in India in any case where the company is not formed by the splitting up, or the reconstruction of a business already in existence or by the transfer to a new business of any building, machinery or plant used in a business which was being previously carried on: Provided that the exemption granted by Clause (d) shall apply to any such company as is referred to therein only for a period of five successive assessment years commencing with the assessment year next following the date in which the company is established, which period shall, in the case of a company established before the commencement of this Act, be computed in accordance with thts Act from the date of its establishment as if this Act had been in force on and from the date of its establishment : Explanation.--For the purposes of Clause (d) "industrial undertaking" means an undertaking engaged in the manufacture, production or processing of goods of articles or in mining in the generation or distribution of electricity or any other form of power: (e) any company solely engaged in the business of transporting goods or passengers by ships (f) any company registered under Sec.25 of the Companies Act, 1956 ." It would be noticed from the various clauses of Sec. 45 of the Act that exemptions have been provided in respect of certain class of companies or persons. The exemption so provided in cases falling under Clauses (a), (b) (c). The exemption so provided in cases falling under Clauses (a), (b) (c). (e) and (f) is not conditioned by limiting the period of exemption, but the exemption provided in Clause (d) is limited for a period of five successive assessment vears commenting with the assessment vear next following the date on which the company is established, and if a company was established before the commencement of the Act. the period of five successive vears will be deemed to have commenced from the date the company was established, irrespective of the fact whether the Act was in force or not. In the instant case, it is undisput- ed that the assessee company is carrying on an industrial undertaking in India and its branch was opened in India at Jamshedpur sometime in the year 1956, soon after the incorporation of the company in the United States of America on the 28th of February, 1956. We have no hesitation in rejecting the first part of the argument put forward on behalf of the assessee. The phrase "any company established with the object of carrying on an industrial undertaking in India etc must mean in the context the formation and registration of a company or its incorporation either in India or outside in any foreign country. It cannot mean the establishment of a place of busi ness in India. This is clear from the fact that Clause (d) talks about the establishment of a company and not a place of business as indi cated in the heading, of Part XI of the Com panies Act, 1956. the first section of which part is 591. It cannot mean the establishment of a place of busi ness in India. This is clear from the fact that Clause (d) talks about the establishment of a company and not a place of business as indi cated in the heading, of Part XI of the Com panies Act, 1956. the first section of which part is 591. It may be of some use to say here that in the Act as passed in the year 1957 the definition -if the "company" in Clause (h) of Sec.2 was " Company means a company as defined in Sec.3 of the Companies Act, 1956, and includes a foreign company within the meaning of Sec. 591 of Part XI of that Act." The existing Clause (h) was substituted by the Finance Act II of 1958 We are definitely of the view that even under the old definition of the "Company" the establishment of a company within the meaning of Clause (d) of Sec. 45 could not mean the establishment of a place of business in India by a foreign company within the meaning of Sec. 591 in according ance with the provisions of law contained in the subsequent sections of Part XI of the Com panics Act, 1956. The position under the existing definition or the "company" in Clause (h) of Section 2 is rather worse instead of being any the better for the assessee. 4. The matter would he -further clear when it is noticed that the object referred to in Clause (d) of Sec. 45 is the object of the company as mentioned in its memorandum oi association at the time of its formation and registration, if in India and the object as mentioned in the certificate of incorporation, if the company is incorporated in the United States, as is the case with the assessee. The exception to the exemption provided in Clause (d) of Section 45 also lends, support to the view expressed by us above, as it says that a company which is formed by the splitting up. or reconstruction of a business already in existence on by the transfer to a new business of anv building, machinery or plant used in a business which was being previously carried on. is not entitled to the exemption Mr. S.N. Datta has rightly placed reliance upon a decision of the Kerala High Court in Comnn of Wealth Tax. or reconstruction of a business already in existence on by the transfer to a new business of anv building, machinery or plant used in a business which was being previously carried on. is not entitled to the exemption Mr. S.N. Datta has rightly placed reliance upon a decision of the Kerala High Court in Comnn of Wealth Tax. Kerala v. Travancore-Cochin Chemicals Private Ltd (1964) 54 FTR-50- (AIR l965 Ker 101). The claim of the assessee company in that case was the period of five years exemption commenced when the factory of the company was constructed and not from the date of the registration of the company, as the company, within the meaning of the exemption clause, should be considered to have been established when the factory was constructed. The argument was rejected by a bench of the Kerala High Court and it was held: "We entertain no doubt that the word established as used in Sec. 45(d) of the Act is synonymous with the expression formed and registered in Sec.3 of the Companies Act, 1956 . We are unable to see any justification for the submission on behalf of the assessee that the expression established with the object of caring on an industrial undertaking signifies a stage subsequent to the date of incorporation, a stage at which the company was capable of going into production." 5. The second part of the argument put forward on behalf of the assessee presented some difficulty. It would appear from the certificate of incorporation. which a Annexure D to the statement of the case, that one of the objects of the company at the time of its incorporation was: "To have one or more offices, to carry or all or any of its operation and business and without restriction or limit as to amount, to purchase or otherwise acquire, to hold, own. mortgage, sell, convey or otherwise dispose of real and personal property of every class and description in any of the States. Districts, Territories or Colonies of the United States and in any and all foreign countries, subject to the laws of such States. Districts. Territories. Colonies or countries." The company was incorporated, as we have said above, on the 28th of February, 1956, and therefore, the period in question will be within the exemption period of five years. Districts, Territories or Colonies of the United States and in any and all foreign countries, subject to the laws of such States. Districts. Territories. Colonies or countries." The company was incorporated, as we have said above, on the 28th of February, 1956, and therefore, the period in question will be within the exemption period of five years. But the question is whether the company was established on the 28th of February. 1956, in the United States with the object of "carrying on an indus trial undertaking in India" Undoubtedly, the exemption for a period of five years has been provided in Clause (d) of Sec. 45 of the Act in order to give impetus to the companies established with the object of carrying on an industrial undertaking in India in order to promote the growth of industrial undertakings, and this impetus has been extended not only to the com panics formed and registered in India but to foreign companies also, provided the foreign companies have been established, i.e., formed or incorporated, with the object of carrving on an industrial undertaking in India The principal object of the assessee company was to carry on all or any of its operations and business in any of the States, Districts. Territories or Colonies of the United States: and other subsidiary object was to carry on the same in any and all foreign countries subject to the laws of such countries The secondary or the subsidiary object as provided in the certificate of incorporation of the assessee company is too vague and indefinite or. in any event, too wide. to enable us to hold that the assessee company was established with the object of or. in any view, with the objects one of which was to carry on an industrial undertaking in Indin, In our opinion, the exemption provided in Clause (d) of Sec. 45 of the Act is to give impetus to those companies whether established in India or outside it, whose definite object, or one of the objects, is, to carry on an industrial undertaking in India. It cannot cover a case of a company like the assessee which was not incorporated with the specific object of carry ing on an industrial undertaking in India. It cannot cover a case of a company like the assessee which was not incorporated with the specific object of carry ing on an industrial undertaking in India. It was incorporated, as we have said above, to carry on its operations of business in any and all foreign countries: and that was wide enough to embrace within its objects of carry ing on its operations and business in India also but is too wide to be squeezed in within the exemption Clause (d) of Sec. 45 of the Act. 6 In the result, we decide this reference against the assessee and hold that on the facts and in the circumstances, the assessee company was not a company established with, the object of carrying on an industrial undertaking in India and. as such, was not entitled to exemi- tion from the wealth tax under Section 45(d) of the Act. The assessee must pay the cost of refer ence: bearing fee Rs. 250 only.