COMMISSIONER OF WEALTH TAX VS SUNEHARI LAL GARG
1998 P T D 2309
[225 I T R 913]
[Allahabad High Court (India)]
Before Om Prakash and Bhagwan Din, JJ
COMMISSIONER OF WEALTH TAX
versus
SUNEHARI LAL GARG
Wealth Tax Reference No.213 of 1980, decided on 12/12/1996.
Wealth tax---
---- Net wealth---Exemption---Gifts made by assessee to his minor children between 31-3-1964 and 1-4-1972---Amounts chargeable to gift tax or exempted under S.5 of Gift Tax Act during period 31-3-1964 to 1-4-1972---Scope of proviso to SA(1)(a) of Wealth Tax Act---Value of such gifts not includable in net wealth of assessee even for assessment years 1972-73 and subsequent years---Indian Wealth Tax Act, 1957, SA(1)(a).
Once an amount transferred by the assessee to his minor children was chargeable to gift tax or not chargeable under section 5 of the Gift Tax Act, 1958, during the period from March 31, 1964, to April 1, 1972, the value of said assets could not be included in the net wealth of the assessee, for all time to come and not merely for the assessment years falling within the said two dates.
CWT v. H.H. Bhawanisingh (1990) 181 ITR 458 (MP) and Parashuram (G.A.) v. CWT (1988) 171 ITR 41 (AP) fol.
JUDGMENT
Despite sufficient service, the assessee has failed to appear and, therefore, we have heard only learned standing counsel for the Revenue. At the instance of the Revenue, the Income-tax Appellate Tribunal has referred the following questions relating to the following consecutive assessment years 1972-73 to 1975-76 for the opinion of this Court:
"(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the amount of Rs.43,100 which represented the amount of gift made by the assessee to his minor children could not be included in his net wealth for the assessment year 1972-73?
(2) Whether, on the facts and in the circumstances of the case, the contention of the Department before the Income-tax Appellate Tribunal that the proviso to section 4(1)(a) of the Wealth Tax Act, 1957, made section 4(1)(a) of the Wealth Tax Act, 1957, inoperative only for a period of assessment years 1964-65 to 1971-72 in respect of the transferred assets chargeable or exempted under section 5 of the Gift-tax Act, 1958, and that from the assessment year 1972-73 and onwards such assets were to be included in the net wealth of the assessee irrespective of its charge ability or exemption under the Gift-tax Act is legally correct and whether the Income-tax Appellate Tribunal erred in law in not accepting the same?
(3) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in upholding the Appellate Assistant Commissioner's action in deleting an addition of Rs.43,100 made by the Wealth-tax Officer to the assessee's wealth under section 4(1)(a) of the Wealth Tax Act 1957?"
The assessee is an individual. In the returns of wealth filed by the assessee for the consecutive assessment years 1972-73 to 1975-76, he disclosed an amount of Rs.43,100 which represented gifts made by him to his minor children. The question arose whether the said amount was includible in the net wealth of the assessee.
Whereas the Wealth Tax Officer took the view that the said amount will not be included in the net wealth of the assessee only up to the assessment year 1971-72 in view of the first proviso to subsection (1) of section 4 of the Wealth Tax Act, 1957 (briefly, "the Act"), the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal took the view that once the amount was chargeable to gift-tax during the period from March 31, 1964, to April 1, 1972, the value of the said assets will not be included in the net wealth of the assessee.
The question is squarely covered by the decisions in the cases of: (1) G.A. Parashuram v. CWT (1988) 171 ITR 41 (AP) and (2) CWT v. H.H. Bhawanisingh (1990) 181 ITR 458 (MP). In the case of G.A Parashuram (1988) 171 ITR 41, the Andhra Pradesh High Court clearly held that once the amount was chargeable to gift-tax during the period from March 31, 1964, to April 1, 1972, then the said amount will not be included in the net wealth for all time to come. A similar view was taken by the Madhya Pradesh High Court in the case of H.H. Bhawanisingh (1990) 181 ITR 458. We are in respectful agreement with the view taken by the Andhra Pradesh and the Madhya Pradesh High Courts.
Following the aforesaid decisions, we agree with the conclusion reached by the Appellate Tribunal and answer the question referred to this Court in the affirmative, i.e., in favour of the assessee and against the Revenue.
M.B.A./1484/FC ??????????????????????????????????????????????????????????????????????????????? Question answered.