VAIDYASUBRAMANIAM V Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE assessee's wife acquired a plot of land in 1955 out of the amounts given by the assessee and on the said land, a house was constructed by utilising a sum of Rs. 90,000 gifted by the assessee to her after 1956. THE construction of the house was completed in 1957. THE assessee and his wife have been residing in the said house ever since. For the assessment years in reference, namely, 1965-66 to 1968-69, the Wealth-tax Officer included Rs. 1,60,000 on account of this property presumably under Section 4(1)(a)(i) of the Wealth-tax Act, 1957. THE assessee contested this inclusion in appeal. Before the Appellate Assistant Commissioner, the assessee contended that the Wealth-tax Officer ought to have included under Section 4(1)(a)(i) only the value of the asset transferred after April 1, 1956, that is, Rs. 90,000, and not the entire value of the house to the extent of Rs. 1,60,000 and the Wealth-tax Officer erred in not allowing exemption for this asset under Section 5(1)(iv) of the Act. THE Appellate Assistant Commissioner held that the asset that had to be included was that which on the valuation date was held by the wife of the assessee to whom it had been transferred by the assessee otherwise than for adequate consideration or in connection with an agreement to live apart, whether the asset referred to was held in the form in which it was transferred or otherwise. He, therefore, confirmed the Wealth-tax Officer's action in taking the value of the asset transferred under Section 4(1)(a)(i) at Rs. 1,60,000. As regards the second contention, he held that, in view of the language of Section 5(1)(iv), the assessee was entitled to exemption of Rs. 1,00,000 as provided thereunder.

(2.) THE department being aggrieved with the Appellate Assistant Commissioner's order went up in appeal to the Tribunal. THE assessee also went up in cross-objection being aggrieved by the Appellate Assistant Commissioner's decision that what was includible was the value of the house property and not merely the cash of Rs. 90,000 gifted by the assessee to his wife. THE Tribunal held that the inclusion of Rs. 1,60,000 in the net wealth of the assessee was correct. With regard to the appeal preferred by the department, the Tribunal allowed the appeal. THE result was that the value of the house, namely, Rs. 1,60,000, as on the valuation date was included in the net wealth of the assessee and the assessee was not given the exemption under Section 5(1)(iv). It is the correctness of this conclusion of the Tribunal that is challenged in this reference in the form of the following two questions which have been referred to this court by the Tribunal at the instance of the assessee;

(3.) HOWEVER, stress is laid on the word "such" qualifying the word "assets" occurring in the provision already extracted and, therefore, it is contended that the words "such assets" must refer to only the sum of Rs. 90,000 which alone was transferred by the assessee to his wife, and, therefore, its value can only be Rs. 90,000. We are unable to place any such construction on the word "such" qualifying the word "assets". Normally speaking, but for the provision at the end of Sub-clause (v) which we have extracted, Section 4(1)(a)(i) would have required the continued existence of the asset transferred by the husband to the wife in the same form in which it was transferred. Because of the specific provision at the end of Clause (v) which we have extracted, it is not now necessary that the asset transferred should be the same as the asset held by the spouse on the valuation date. The word "such" merely indicates the correlation between the asset transferred, and the asset held by the spouse on the valuation date.