COMMISIONER OF WELTH TAX Vs. SARALA DEBI BIRLA

JUDGEMENT

(1.) This reference relates to a question involved in the wealth-tax assessment for the assessment years 1964-65 and 1965-66. The relevant valuation dates were 31st March, 1964, and 31st March, 1965, respectively. The assessee had made a gift of Rs. 1,00,011 to her minor daughter, Kumari Manjushree Birla, on the 7th of October, 1959. Applying the provisions of Section 4(1)(a)(iv) of the Wealth-tax Act, 1957, the Wealth-tax Officer had included the said amount in the net wealth of the assessee for the said two years. The assessee preferred an appeal before the Appellate Assistant Commissioner. It was contended that the sum of Rs. 1,00,011 was exempt under the proviso to Section 4(1)(a) introduced by the Act 46 of 1964. The Appellate Assistant Commissioner negatived this contention and upheld the order of the Income-tax Officer on this point. The assessee preferred an appeal before the Tribunal contending that the sum was exempt from the levy of wealth-tax under the proviso to Section 4(1)(a) because she had paid gift-tax with reference to the said amount. It was contended on behalf of the revenue on the other hand that the proviso would only apply to a transaction of gift made in the previous years relevant to 1965-66 and subsequently. The Tribunal held that the proper and reasonable construction of the proviso was that so long as the gift was chargeable to or exempt from gift-tax to that extent Section 4(1 )(a) ceased to have any operation for attributing the statutory fiction embodied in it. As at the relevant time the gift was chargeable to tax the exemption was to operate from the assessment year commencing after 31st March, 1964, i.e., 1964-65. Therefore, to that extent, there would be exclusion under Section 4(1 )(a).

(2.) Under the circumstances aforesaid under Section 27(1) of the Wealth-tax Act, 1957, the following question has been referred to this court:

(3.) The question, therefore, is whether in respect of gift made in this case which was on the 7th October, 1959, and which had been subjected to the Gift-tax Act, 1958, the assessee was exempt in view of the proviso.