COMMISSIONER OF WEALTH TAX Vs. ANURADHA SMT

JUDGEMENT

(1.) IN this reference, which is under s. 27(1) of the W.T. Act 1957, we are concerned with Dr. K. J. Sheth; he having died at the stage of appeal before the Tribunal, the present respondent has been brought on record as his legal heir. Dr. Sheth was a member of a HUF comprising of himself, his wife, i.e., the present respondent and four children -one son and three daughters. He owned various equity shares. On January 15, 1959, he transferred 4,000 equity shares of Changdeo Sugar Mills Ltd., and 70 equity shares of Kolhapur Sugar Mills Ltd., owned by himself, to the HUF comprising of himself, his wife and minor children. Similarly, on December 11, 1959, the assessee 'transferred' 5,000 fully paid up and 5,000 partly paid equity shares in Great Eastern Shipping Co., to the HUF. In respect of this lot of 10,000 equity shares of the Great Eastern Shipping Company, the assessee made a declaration on a stamp paper of Rs. 3; a copy of the said declaration is to be found as annexure 'C' to the statement of case. In para. 1 of the said declaration the said K. J. Sheth referred to the fact of his being the karta of the joint family property belonging to the HUF consisting of himself, his wife, Anuradha, son and daughters, and in para. 3 the necessary declaration is contained, which is to the effect that as and from December 11, 1959, he is holding and continues to hold as part of the joint family property belonging to the said HUF the aforesaid 10,000 equity shares more particularly described in the schedule to the declaration. In his return for wealth -tax purposes, the assessee excluded from his net wealth the value of the above shares which, under the declaration, became the property of the HUF. The assessee's contention was that the value of these shares was not includible in his net wealth as they had ceased to be his individual property by reason of the fact that he had impressed them with the character of joint family property. The aggregate value of these shares was Rs. 2,25,831. The WTO refused to accept this contention and included the value in the net wealth of the assessee.

(2.) THE assessee carried the matter in appeal to the AAC. A similar question had arisen for consideration in the earlier year and, following the decision of the Tribunal in that year, the AAC upheld the contention of the assessee and directed the exclusion of the amount of Rs. 2,25,831 from the net wealth of the assessee.

(3.) THE Tribunal considered the contention advanced on behalf of the department which was that by reason of the declaration and throwing into the hotchpot, there was a benefit secured to the wife and minor children as members of the joint family. According to the Tribunal, the words 'for the benefit' in the statutory provision above extracted indicate that there should be a transfer either to or for the benefit of the wife and the minor children. The words 'for the benefit of' would seem to indicate in the view of the Tribunal that the transfers which were sought to be brought within the net of the statutory provision were transfers through the medium of trust. According to the Tribunal, a trust could not be spelt out merely when property was thrown into the hotchpot impressed with the character of joint family property. Accordingly, the Tribunal dismissed the appeal and found in favour of the assessee. It is from this decision that the following question has been referred to us: 'Whether, on the facts and in the circumstances of the case, the shares of the value of Rs. 2,25,831 could be said to have been transferred by the assessee for his benefit or for the benefit of his wife or for the benefit of children so as to attract section 4(1)(a)(iii) of the Wealth -tax Act, 1957 ?'