COMMISSIONER OF WEALTH TAX Vs. KISHAN LAL BUBNA

JUDGEMENT

(1.) This is an appeal by special leave against the judgment of the High Court at Bombay on a reference under the provisions of S.27(1) of the Wealth-tax Act, 1957. The question arose in respect of the Assessment Year 1962-63, for which the relevant valuation date was 31st March, 1962 AND it reads thus :

(2.) The assessee, an individual, created two trusts, on 18th February, 1957 and 11th November, 1957, for the benefit of his two minor daughters. Thereby the respective amounts of Rs.25, 101/- and Rs.21,201/- were settled upon trust and transferred to the trustees. After the trusts had been created the trustees purchased shares out of the trust funds. On the valuation date the trust funds were held in shares, the valuation of which was Rs.75,610/-. In determining the wealth-tax payable by the assessee the Wealth-tax Officer took the view that it was the market value of the shares on the valuation date that was to be included in the wealth of the assessee. He rejected the contention that only the sum of Rest. 46,302/ - which was settled by the assessee upon trusts was to be taken into account in computing his wealth. The decision of the Wealth-tax Officer was confirmed in appeal. In a further appeal before the Income-tax Appellate Tribunal the assessees contention was upheld and, arising out of its judgment the question quoted above was referred to the High Court. The High Court, upon an interpretation of S. 4(1)(a)(iii) of the Wealth-tax Act, answered the question in the affirmative and in favour of the assessee. The Revenue is in appeal before us.

(3.) Section 4(1)(a)(iii) of the Wealth-tax Act reads thus :