COMMISSIONER OF WEALTH TAX Vs. BHAWANISINGH H H

JUDGEMENT

(1.) BY this reference under Section 27(1) of the Wealth-tax Act, 1957 (hereinafter referred to as "the Act"), the Income-tax Appellate Tribunal, Jabalpur Bench, has referred the following question of law to this court for its opinion :

(2.) THE material facts giving rise to this reference briefly, are as follows : THE assessee is an ex-ruler of the former State of Chhatarpur. On October 1, 1970, he created a trust and transferred some parcel of agricultural land, buildings and articles of gold and silver to the trust. During the course of the assessment under the Act for the years 1971-72 to 1974-75, the assessee contended that the property in question, having been transferred to the trust, did not belong to him and should not, therefore, be included in his net wealth. THE Wealth-tax Officer rejected that contention and included the value of those properties in the net wealth of the assessee. On appeal, the Commissioner of Wealth-tax (Appeals), held that as the properties were transferred to the trust, proceedings of assessment under the Gift-tax Act should have been initiated by the Gift-tax Officer. It was further held that by virtue of the proviso to Clause (iv) of Section 4(1)(a) of the Act, as the transfer of assets was chargeable to gift-tax, the value of the said assets could not be included in the net wealth of the assessee. THE Commissioner, therefore, directed the Wealth-tax Officer to exclude the value of the assets in question while computing the net wealth of the assessee. Aggrieved by that order, the Revenue preferred an appeal before the Tribunal which was dismissed. Hence, at the instance of the Revenue, the aforesaid question of law has been referred to this court for its opinion.

(3.) THE reference is accordingly answered in favour of the assessee and against the Revenue. In the circumstances of the case, parties shall bear their own costs of this reference.