SARALA DEBI BIRLA Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) CIVIL Appeal No. 1118/NT/1975, by special leave, by the Commissioner of Wealth-Tax, Andhra Pradesh, and CA Nos. 1226 & 1227/NT/1975, on a certificate, under Section 29(1) of the Wealth-Tax Act, 1957, [Act] by the assessee raise a question as to the proper construction of the proviso to Sec. 4[1][a] of the Act, which provides for exemption respecting transferred assets which would otherwise be includible in the wealth of the assessee under Sec. 4[1][a] of the Act.

(2.) THERE appears a divergence of judicial opinion on the point in the High Courts. In C.W.T. v. Smt. Sarala Debi Birla [101 ITR 488 (Cal.)], T. Saraswathi Achi v. C.I.T. [104 ITR 185 (Mad.)], C.W.T. v. Seth Nand Lal Ganeriwala [107 ITR 758 (Pun.)], M.G. Kollankulam v. C.I.T. [115 ITR 160 (Kerala)], Malti v. C.W.T. [121 ITR 676 (MP)] and C.W.T. v. Rasesh N. Mafatlal [126 ITR 173 (Bom.) several High Courts have constructed the provision in the manner suggested by the Revenue. C.W.T. v. Hashmatunnisa Begum [108 ITR 98 (AP)] has taken the opposite view extending a wider benefit of the exemption. The opinion of the Calcutta High Court in 101 ITR 488, which is representative of the view in favour of Revenue, is under appeal in CA 1226 and 1227 of 1985 and the opinion of the Andhra Pradesh High Court in 108 ITR 98 which is favourable to the assessee is under appeal No. CA 1118 of 1975 preferred by the Revenue.

(3.) IN CA 1226 and 1227 of 1975 the assessment years concerned are 1964-65 and 1965-66 corresponding to the valuation dates 31.3.1964 and 31.3.1965. On 7.10.1959 Smt. Sarla Debi Birla, the assessee, made a gift of Rs. 1, 00, 011/-, to her minor daughter Smt. Manju Rani Birla. The assets so transferred were included in the assessee's wealth for the two assessment years 1964-65 and 1965-66 under Sec. 4[I][a][ii] of the Wealth-tax Act. The claim of the assessee that the proviso to Sec. 4[I][a] operated to exclude the asset from the net wealth of the assessee as the transfer was chargeable to gift-tax was not accepted by the Wealth-tax Officer, who completed the assessment including the transferred-asset in the assessee's net-wealth. The assessee's appeal before the Appellate Asstt. Commissioner was unsuccessful.