DEVI BAI PURUSHOTHAMDAS Vs. WEALTH-TAX OFFICER

JUDGEMENT

(1.) This appeal is directed against the enhancement of the value of investment shown by the assessee.

(2.) The assessee is an individual. As on the valuation date 18-5-1981 corresponding to the assessment year 1982-83 she showed in her net wealth her interest in a firm M/s Jaisingh Investments at Rs. 1,99,643. This amount represented her share of the capital on the closure of the books of the firm on 10-5-1981. The firm had been commenced with effect from 21-4-1980 and evidenced by a document dated 21-5-1980 executed by the assessee and five other parties. The firm was carrying on money-lending business. On 21-4-1980 the assessee gave her flat in Bombay to the firm as her capital contribution. On 4-12-1980 the firm sold the flat for Rs. 2,35,000. In the income-tax proceedings of the assessee it was held that the firm should be ignored and the assessee taken to have sold the flat directly so that capital gains was to be assessed in the hands of the assessee on the full consideration received by the firm. It is stated that this view of the department was confirmed by the order of the Tribunal dated 30th June 1989 in ITA Nos. 1904 and 1905 (Mds) /86. Consequently the WTO was of the view that the full consideration received should be treated as belonging to the assessee and therefore he substituted the sum of Rs. 2,42,893 (Sale Price Rs. 2,35,000 + Rs. 7,893 interest) for value of Rs. 1,99,643 shown by the assessee. This was confirmed on appeal.

(3.) In the further appeal before us, it was contended on behalf of the assessee that whatever may have been the reasons for enhancing the capital gains for income-tax purpose, the assessment for wealth-tax depended upon the actual asset held by the assessee and since the assessee did not receive the full consideration, it could not be assessed as part of the net wealth of the assessee. On the other hand, it was contended on behalf of the revenue that since the Tribunal had held that the firm was sham, the entire amount be taxed in the hands of the assessee.