The expression "set up" in Section 5 (1) (xxi) of the Wealth-tax Act, 1957 means "ready to commence business".

Judgment

BHARGAVA, J. : The respondent is a public limited company incorporated under the Indian Companies Act, 1913 in the year 1939 and was carrying on the business of manufacture of absorbent cotton wool. In March, 1955, the Board of Directors resolved to establish a new spinning unit under the name of Sudarsanan Spinning Mills for which a licence was obtained from the Government of India under the Industries (Development and Regulation) Act, 1951, in August 1955. The respondent placed orders for purchase of necessary spinning machinery and plant in the months of January and February, 1956 The construction of factory buildings was taken in hand in March, l956 and these constructions were completed by December, 1957. The erection of the spinning machinery and the plant in the buildings was completed in several stages commencing from June, 1957. A licence from the Inspector of Factories for working the factory was obtained in June, 1958. The statement of the case further mentioned that the time given to complete the project was extended by the Government up to 17th March, 1959. The respondent was assessed to wealth tax for the assessment year 1957-58, and in that year the respondent claimed that, in computing the wealth on the valuation date which was 30th September, 1956, an amount of Rs. 1,43,727/- should be deducted as being the amount laid out in seting up this new unit. The Wealth-tax Officer disallowed the claim on the ground that the unit was set up prior to the date on which the Wealth-tax Act (hereinafter referred to as "the Act") came into force i. e., 1st April, 1957. On the same basis, the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal upheld that order. Thereupon, at the request of the respondent, the following question of law was referred for opinion of the High Court of Madras :-

"Whether the aforesaid asset of Rs. 1,43,727 is exempt under Section 5 (1) (xxi) read with the second proviso thereunder of the Wealth-tax Act?"

The High Court answered the question in favorer of the respondent, and consequently, this appeal has been brought up to this Court by the Commissioner of Wealth-tax, Madras, by special leave.

2. The question that fell for determination depended on the interpretation of Section 5 (1) (xxi)of the Act read with the second proviso to that clause which are reproduced below:

"5(1)(xxi)-that portion of the net wealth of a company established with the object of carrying on an industrial undertaking in India within the meaning of the Explanation to clause (d) of Section 45, as is employed by it in a new and separate unit set up after the commencement of this Act by way of substantial expansion of its undertaking :-

Provided that-

(a) * * * *

(b) * * * *

Provided further that this exemption shall apply to any such company only for a period of five successive assessment years commencing with the assessment year next following the date on which the company commences operations for the establishment of such unit."

It has been urged before us by learned counsel for the Commissioner that the main provision of clause (xxi) should be interpreted in conjunction with the second proviso so as to give a harmonious construction to both parts of the provision with which we are concerned. Relying on this principle he urged that we should hold that a new and separate unit is set up only when the company commences operations for the establishment of such unit. He relied on the principle stated by Maxwell in his book On Interpretation of Statutes 11th Edn. at p. 155 that there is no rule that the first or enacting part is to be construed without reference to the proviso.

"The proper course is to apply the broad general rule of construction, which is that a Section or enactment must be construed as a whole, each portion throwing light, if need be, on the rest." "The true principle undoubtedly is that the sound interpretation and meaning of the statute, on a view of the enacting clause, saving clause, and p