ORDER
George Cheriyan, Accountant Member
1. This appeal by the assessee, an individual, arises out of wealth-tax proceedings and relates to the assessment year 1975-76. The assessee is a partner in a firm, Jayendra Brothers. This firm bought kerosene from Bharat Petroleum and in due course sold the same to licensed dealers. The firm owned, amongst other assets, tanker lorries for transporting the kerosene. In substance, the firm functioned as agents, stockists and distributors of kerosene. In the wealth-tax return, as filed, there was no claim for exemption of the interest of the assessee in the assets belonging to the firm. The WTO, therefore, completed the assessment on the net wealth as returned save for a small addition in the value of jewellery.
2. The assessee appealed and before the AAC claimed exemption of the assessee’s interest in the assets of the firm under the provisions of Section 5(1)(xxxii) of the Wealth-tax Act, 1957 (‘the Act’). The claim of the assessee was that the firm was engaged in the business of distribution of power and was, therefore, an ‘industrial undertaking’ within the meaning of the Explanation to Section 5(1)(xxxi) which governed the meaning of the expression ‘industrial undertaking’ in Section 5(1)(xxxii) also. In support of the plea reliance was placed on a decision of the Tribunal in the case of Smt. V. Saraswati v. WTO [WT Appeal No. 492 (Mad.) of 1977-78, dated 6-12-1978.] That was a case where exemption was allowed in relation to the assets of a firm, which was a distributor of liquified pretroleum gas. The AAC did not agree with the contentions of the assessee and rejected the claim on the ground that the firm was not an ‘industrial undertaking’.
3. The assessee appealed to the Tribunal. The assessee pleaded that the order of the Tribunal referred to would be applicable to the facts of the present case also. The Bench before which the appeal came in the first instance considered that the issue requi red reconsideration and a reference was made to the President under Section 24(77) of the Act for constitulion of a Special Bench. It is, thus, that the appeal comes to be heard by this Special Bench, which has been constituted by the President for the purpose.
4. The learned counsel for the assessee submitted that under the provisions of Section 5(1)(xxxii) wealth-tax is not payable in respect of:
(xxxii) the value, as determined in the prescribed manner, of the interest of the assessee in the assets (not being any land or building or any rights in any land or building or any asset referred to in any other clause of this sub-section) forming part of an industrial undertaking belonging to a firm or an association of persons of which the assessee is a partner or, as the case may be, a member ;”
Such assets are also not to be included in the net wealth of an assessee.
He further stated that the Explanation to Section 5(1)(xxxi), which reads as under, gives the following meaning to the term ‘industrial undertaking’:
“For the purposes of Clause (xxxa), this clause, Clause (xxxii) and Clause (xxxiv), the term ‘industrial undertaking’ means an undertaking engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining ;”
The learned counsel stated that the aforesaid provisions were introduced by the Finance Bill, 1972 with effect from 1-4-1973–[1972] 83 ITR (St.) 155. He invited our attention to the relevant Notes on Clauses at page 165. He submitted that the word ‘power’ had not been defined in the Act and the Notes on Clauses also did not amplify the term any further. Reliance was placed on the judgment of the Calcutta High Court in CIT v. Stanton & Stavely (Overseas) Ltd. [1984] 146 ITR 405 for the proposition that where an expression was not defined in a statute, it should be construed from the commercial p oint of view having regard to the well known concepts in trade and commerce. He referred to the following extract from Columbia Encyclopaedia, Third edn., 1963:
Power, time rate of doing work. Two units of power commonly employed are the horsepower, devised for use in mechanics by James Watt, and the Watt, an electrical unit named after him. Horsepower is based on the concept that horse can do 550 foot-pounds of work per second ; a foot-pound is the work done when a one-pd. weight (force) is moved through a distance of one foot. A watt is equal to one Joule per second. The terms power and Energy have become synonymous in common usage ; for example, electrical energy is usually referred to as electric power.(p. 1712)
He stated that ‘power’ is defined as the rate or measure of doing work, and in this technical sense one could not speak of power being distributed. Therefore, it was that it is said that in common usage ‘power’ and ‘energy’ have become synonymous. With reference to the Dictionary of Physics by Gray and Alam Issacs, 1976, page 184, the learned counsel submitted that energy was of two different kinds, potential energy and kinetic energy and it assumed several forms such as electric energy, heat energy, chemical energy, energy associated with light and sound and nuclear energy. He went on to state that energy stored in the chemical bonds of a substance was converted into another form when a chemical reaction occurred, i.e., when a substance burnt chemical energy got converted into heat energy. His submission, therefore, was that kerosene was comprised of latent chemical energy, which became patent chemical energy on ignition. He referred to the Columbia Encyclopaedia, page 1127, for stating that kerosene was a mixture of hydrocarbons and it is this mixture, which represented the latent chemical energy. Therefore, according to the learned counsel, distribution of kerosene, in common parlance, could be classified as distribution of power since energy was synonymous with power. Various judicial pronouncements were also referred to for the proposition that if the interpretation of a fiscal enactment was open to doubt, then that interpretation should be given, which was most favourable to the taxpayer.
5. The learned departmental representative referred to the meanings of the terms ‘form’ and ‘power’ as occurring in the Chambers’1 Twentieth Century Dictionary, 1983 edn. He submitted that kerosene had to be construed as a source of power but a source of power was something different from power itself. He submitted that by purchasing and distributing kerosene, it could not be held that the assessee was carrying on the business of distribution of a form of power. He stated that in terms of the Explanation a concern would be an industrial undertaking if it generated power or distributed power or did both. In the presenst case, he submitted that the concern did not satisfy any of the aforesaid criteria. The learned departmental representative emphasised that there could be many instances of generation of power apart from generation of electricity. Such instances would be generation of steam, generation of mechanical power, etc. If the concern was engaged in such generation, it would qualify for exemption. Even if there was any difficulty in readily finding out examples of distribution of power in actual practice other than distribution of electricity, he submitted that there was no superfluity in the language used in the Explanation because concerns generating various forms of power, of which instances had been given, were well known. He, therefore, submitted that distributing of kerosene would not come within the term ‘distribution of any other form of power’.
6. We have considered the rival submissions. Both parties have placed before us considerable literature to support their respective stands on what would be the true concept of the term ‘power’. In addition to the aforesaid literature, we would refer to an interesting write up on the concept of energy in the New Encyclopaedia Britannica, 1984 edn., Vol. 6 starting from page 849. It is stated (p. 849) that energy is usually and most simply defined as the equivalent of or capacity for doing work. Further on (page 854) it is mentioned that ‘energy sources’ as a term covers all fuels, flowing, water, sun light and the winds with which man, by the use of appropriate conversion devices, provides himself with necessary energy. The primary sources of energy include (page 857) nuclear fusion, nuclear fission, radioactivity and the motion of the earth and the moon. All forms of energy can be traced to these origins. While ‘energy’ is the capacity for doing work, ‘power’is the rate of doing work and is, thus, the rate of energy flow. From the aforesaid it would be seen that fuels are in fact an energy source. They release stored chemical energy by combustion with natural oxygen or by other means. This concept fits in with the common understanding of the role played by fuels. While a fuel may be an energy source, it is not synonymous with energy itself because as stated already energy is the capacity to do work and this concept is not identical with the mere existence of a substance as such, which may be a source of energy when subjected to process, kerosene undoubtedly is a fuel and, for the reasons stated, we hold that it is not synonymous with energy and, therefore, the question of examining further the propositions canvassed for by the learned counsel for the asses-see that ‘energy’ is synonymous with ‘power’ does not survive. Distribution of kerosene, in our view in the light of the aforesaid discussion, cannot be considered to be distribution of’any other form of power’.
7. There is one more reason for not accepting the proposition advanced on behalf of the assessee. Explanation to Section 5(1)(xxxi) uses the expression ‘an undertaking engaged in the business of generation or distribution of electricity or any other form of power’. This, according to us, means that electricity or any other form of power contemplated in the Explanation should be capable of both generation and distribution ; though it will be sufficient for an assessee to be an industrial undertaking if it is either engaged in the business of generation or distribution of one or the other. The question, therefore, arises whether kerosene oil, which the assessee is supplying in the case before us, is capable of generation . in the sense in which electricity can be generated. The answer to this question, to our mind, cannot but be in the negative. At best the kerosene oil can be extracted from coal or from the wells, etc. It cannot certainly be generated. Therefore, considered from this angle also it is not possible to hold that a supplier of kerosene oil will fall within the meaning of ‘industrial undertaking’ as per the Explanation to Section 5(1)(xxxi). Thus, the firm is not an ‘industrial undertaking’ within the meaning of Section 5(1)(xxxii) and the assessee as a partner is not entitled to any relief in terms of the aforesaid Section.
8. The result is, the appeal is dismissed.