COMMISSIONER OF WEALTH TAX Vs. HASHMATUNNISA BEGUM SMT

JUDGEMENT

(1.) THE question referred to us for our decision under Section 27(1) of the Wealth-tax Act is :

(2.) THE facts leading to this reference are these. THE assessee, Nawab Zahir Yar Jung, filed return of his wealth for the assessment year 1967-68 on November 18, 1967, in the status of individual. He showed a wealth of Rs. 10,08,588 in his return. He died on December 16, 1968, and the assessment proceedings were continued in the names of his legal representatives. THE Wealth-tax Officer computed the net wealth of the assessee at Rs. 10,46,338 and made an assessment accordingly on January 9, 1969. It was claimed on behalf of the assessee by his legal representatives, at the time of hearing before the assessing authority that the value of the gifts of immovable properties made by the assessee to his wives prior to April 1, 1964, should be excluded from the computation in view of the proviso to Section 4(1)(a). THE total of such gifts came to Rs. 1,96,950. This plea of the assessee was rejected on the ground that the proviso would save only inclusion of such of the gifts as were made in the year relevant to the assessment year 1964-65 and the subsequent years and that the proviso did not apply to gifts made earlier to 31st March, 1964. On appeal, the Appellate Assistant Commissioner agreed with the view expressed by the Wealth-tax Officer and dismissed the appeal. On further appeal, the Income-tax Appellate Tribunal differed from the view expressed by the lower authorities and held that the intention of Parliament was to exclude from the net wealth of an assessee the assets transferred by an assessee to his spouse, whether gift-tax is chargeable or whether the transfer is exempt under the Gift-tax Act. In that view, it held that the assessee is entitled to the deletion of the addition of Rs. 1,02,608 in respect of the transfer of assets gifted by him to his wives and allowed the appeal.