In an interesting order the Income Tax Appellate Tribunal has paved the way for the deletion of the additions made by the income tax assessing officers on the returns filed by the owners of aircraft and helicopters which are used by assessees to meet the exigencies of the business.

The assessee, Garware Wall Ropes Ltd, owns a helicopter. This was used for the purposes of the assessee's business. The 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 use of the helicopter.

The finance minister in his Budget Speech 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.

Section 2(ea) provides:

"Assets', in relation to the assessment year commencing on the first day of April, 1993, or any subsequent assessment year, means -- apart from other things -- yachts, boats and aircraft (other than those used by the assessee for commercial purposes)."

The revenue department'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.

The tribunal held that this proposition cannot be accepted as it is nowhere laid down in the statute that 'used for commercial purposes' means that aircraft must be used for running on hire.

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.

It was held that 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 the legislature wanted that a particular asset should be used for hire for claiming exemption, it has 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.

The tribunal observed that the 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 DELHI (soul) of the provision.

ITAT held 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, 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 one's own business also to meet the exigencies of the business. Admittedly, it was treated as business asset. The depreciation was allowed on the same," the ITAT said.

"As such, it can be said that the helicopter was used for commercial purposes. It is therefore beyond the ken of wealth tax," the ITAT held.

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