. Exemption to equity shares under section 5(1)(xxa) – Clarification in view of omission of Ninth Schedule to the Income-tax Act
1. Section 5(1)(xxa ) of the Wealth-tax Act, 1957 provides for exemption from wealth-tax in respect of value of equity shares in any company of the type referred to in clause (d) of section 45 which is established with the main object of carrying on the business of manufacture or production of any one or more of the articles or things specified in the list in the Ninth Schedule to the Income-tax Act, where such shares form part of the initial issue of equity share capital made by the company after the 28th day of February, 1975 for a period of five successive assessment years commencing with the assessment year next following the date on which such shares were first issued.
2. A number of representations have been received in the Board seeking clarification about admissibility of exemption under section 5(1)(xxa) of the Wealth-tax Act in view of the omission of the Ninth Schedule to the Income-tax Act w.e.f. 1-4-1988.
3. The matter has been considered in consultation with the Law Ministry who have advised that the omission of the Ninth Schedule from the Income-tax Act does not affect the admissibility of exemption under section 5(1)(xxa) of the Wealth-tax Act and, for this limited purpose, the Ninth Schedule can be taken to be in the statute. The Assessing Officers shall decide the claims made under section 5(1)(xxa ) of the Wealth-tax Act accordingly.
Circular : No. 627, dated 27-2-1992.