VALLI ALAGAPPAN Vs. THIRD WEALTH-TAX OFFICER

JUDGEMENT

(1.) This appeal reiterates the contention that the jewellery gifted by the assessee should be excluded from the net wealth of the assessee.

(2.) The assessee is an individual. In the previous year ended 31-3-1982, corresponding to the assessment year 1982-83, the assessee transferred 27 items of jewellery of the value of Rs. 7.5 lakhs in favour of M/s. M and L Investment Co. Pvt. Ltd., in terms of the letter dated 12-4-1982. It was stipulated therein that the transfer could be revoked after 74 months but within 3 months after the expiry of that period. The Appellate Tribunal by order dated 30-11-1989 in G. T. A No. 75/Mds/88 accepted that this was a revocable gift u/s. 6(2) of the Gift-tax Act read with Rule 11 of the Gift-tax Rules. However, the W. T. O. was of the opinion that the value of the jewellery had to be added back to the net wealth of the assessee on the ground that the assessees right in the property had not ceased because she had a right to revoke the gift. The CWT (Appeals) agreed with his view by noting that there was a provision for the transferor to re-assume the property by revoking the transfer.

(3.) In the further appeal before us it was pointed out on behalf of the assessee that the transfer was an irrevocable transfer within the Explanation to section 4(b) of the Wealth-tax Act and it was also not an asset within the meaning of section 2(e) (v) in the hands of the assessee and, therefore, it should be excluded from the net wealth. Reliance was placed on the decision in the case of CWT v. Smt. T. Rugmini Achi, 1987 166 ITR 711. On the other hand, the revenue supported the orders of the authorities below by claiming that the interest of the assessee in the property had not ceased altogether and, therefore, it should be added to the net wealth.