COMMISSIONER OF WEALTH TAX VS SMT. SUSHILADEVI
1999 P T D 960
[232I T R 556]
[Madhya Pradesh High Court (India)]
Before A.R. Tiwari and S. B. Sakrikar, JJ
COMMISSIONER OF WEALTH TAX
Versus
Smt. SUSHILADEVI
M.C.C. No.9 of 1995, decided on 12/07/1996.
Wealth tax--
----Transfer of assets---Assets transferred to person who married donor's son subsequently to transfer ---Donee was not donor's daughter-in-law at the time of transfer---Assets which had been transferred were not includible in total wealth of donor---Indian Wealth Tax Act, 1957, SA(1).
Held, that the Tribunal was right in holding that for making addition on the basis of deeming provisions contained in section 4(1)(a)(v) of the Wealth Tax Act, 1957, the donee should not only be the wife of the assessee's son on the valuation date, but also at the time of the gift.
Philip John Plasket Thomas v. CIT (1963) 49 ITR (SC) 97 applied.
A.M. Mathur with A.K. Shrivastava for the Commissioner.
R. Mukati for the Assessee.
JUDGMENT
A.R TIWARI, J.--- At the instance of the Commissioner of Wealth Tax Bhopal, the Tribunal has stated the case and referred the undernoted question of law, on application presented under section 27(1) of the Wealth Tax Act, 1 957 (for short "the Act") and registered as R.A. No.46/Ind. of 1995 arising out of the order, dated January 16, 1995, passed by it in W.T.A. No.30/Ind. of 1991 for the assessment year 1986-87, for our opinion:
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that for making addition on the basis of deeming provisions contained in section 4(1)(a)(v) of the Wealth Tax Act, 1957, the donee should not only be the wife of the assessee's son on the valuation date, but also at the time of the gift?"
The facts lie in a narrow compass.
The assessment was originally completed under section 16(3) of the Act on March 19, 1987. By invoking the provisions of section 25(2) of the Act, the Commissioner of Wealth-tax set aside the said assessment on March 8, 1989. The Assessing Officer then again completed the fresh assessment and added the value of shares of TISCO at Rs.2,48,737 under section 4(1)(a)(v) of the Act to the net wealth originally assessed. The assessee had gifted 201 shares of TISCO valued at Rs.2,48,787 to Ku, Indira Dharnidharka on April 13. 1985. The donee became, the daughter-in-law of the assessee subsequently on December 14, 1985, as her son was married to the donee after eight months of the date of the gift. It was contended before the Assessing Officer that the valuation date for the assessment year 1986-87 was March 31, 1986, and the date of the gift of shares was April 13, 1985, and as such the provisions of section 4(1)(a)(v) of the Act were not attracted. The Assessing Officer negatived the contention and concluded that the transaction was hit by the aforesaid provisions. The Commissioner of Wealth Tax (Appeals) confirmed the addition in appeal. Dissatisfied, the assessee carried the matter to the Tribunal. It was contended that the assessee had made gifts when the donee was not her son's wife and, as such, the aforesaid provisions were not attracted. The assessee thus, questioned the inclusion of the value of the shares. The Tribunal accepted the contention of the assessee and held that the addition was erroneous. Aggrieved by the order, the Department filed the application under section 27(1) of the Act. The Tribunal, on this application, stated the case and referred the question as noted above.
We have heard Shri Anand Mohan Mathur, learned senior counsel with Shri A.K. Shrivastava, for the applicant and Shri Mukati, learned counsel for the non-applicant.
Counsel for the applicant supported the reference and submitted that the question may be answered in favour of the Department. Counsel for the non-applicant, however, submitted that the Tribunal rightly appreciated the facts and correctly applied the provisions of law stated in Philip John Plasket Thomas v CIT (1963) 49 ITR (SC) 97 and in Harpyari Devi Garg v. WTO (1982) 1 ITD 241 (MP). He, therefore, submitted that in view of the settled position of law, there was no justification to state the case and refer the question. He submits that the aforesaid question merits to be answered in favour of the assessee.
The Tribunal considered the question and concluded as under:--
"The pronoun 'whom' occurring in clause (v) has been clearly used for the noun, son's wife and that shows that the donee should not only be the son's wife on the valuation date, but at the time of gift also. On an analogous provision, viz. section 16(3)(a)(iii) of the Indian Income-tax Act, 1922, the Supreme Court in the case of Philip John Plasket Thomas v. CIT (1963) 49 ITR (SC) 97, took the view that the relationship of husband and wife must subsist not only at the time of accrual of income from the assets, but also when the transfer of the asset is made. On the pari materia principle, the decision of the Supreme Court can be indubitably pressed into service for the purpose of the instant case. We, therefore, hold that section 4(1)(a)(v) is not attracted to the instant case, as Smt. Manju Garg was not the wife of the assessee's son when the gift was made. The impugned value of jewellery, therefore, cannot be brought to tax on the basis of the deeming provision, viz. section 4(1)(v), in the hands of the assessee. "
In Philip John Plasket Thomas v. CIT (1963) 49 ITR (SC) 97, it is held as under (page 105):
"This brings us to the second question, namely, whether the transfer of shares made by the assessee in favour of Mrs. Judith Knight on December 10, 1947, was to take effect only from the date of their marriage. It is admitted that on December 10, 1947, the assessee and Mrs. Knight were not married. It is also admitted that they were engaged to be married and the engagement was announced on September 3, 1947. The transfer deed, which we have earlier quoted contained no words of postponement. On the contrary, it contained words, which indicated that the transfer took effect immediately. Learned counsel for the respondent has rightly pointed out that the expression in the transfer deed in consideration of my forthcoming marriage can have very little meaning as a real consideration, because on September 3, 1947, the parties had mutually promised to marry each other; therefore, the promise to marry had been made earlier than December 10, 1947. Learned counsel for the respondent has argued before us that the transfer of shares was really a gift made to Mrs. Knight in contemplation of the forthcoming marriage and the gift was subject to a condition subsequent, namely, that of marriage which if not performed would put an end to the gift. This does not, however, advance the case of the respondent in any way. A gift may be trade subject to conditions, either precedent or subsequent. A condition precedent is one to be performed before the gift takes effect; a condition subsequent is one to be performed after the gift had-taken effect, and, if the condition is unfulfilled, will put an end to the gift. But if the gift had already taken effect on December 10, 1947, and the condition subsequent, has been later fulfilled, then the gift is effective as from December 10, 1947, when the assessee and Mrs. Knight were not husband and wife. That being the position, sub-clause (iii) of section 16(3)(a) will not be attracted to the case as the transfer of the shares was not made by the husband to his wife."
In view of the aforesaid legal position, we are satisfied that the Tribunal was correct in taking the view in favour of the assessee as it did.
Accordingly, we answer the question in the affirmative i.e. in favour of the assessee and against the Department.
This reference stands disposed of in terms indicated above, but without any orders as to costs. Counsel fee for each side, is however, fixed at Rs.750 if certified.
A copy of this order shall be transmitted to the Tribunal in accordance with law.
M.B.A./1876/FCOrder accordingly.