COMMISSIONER OF WEALTH TAX Vs. SUBHASH CHAND SUD

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Chandigarh Bench, has, under Section 27(1) of the Wealth-tax Act, 1957, referred the following question of law in both the above references for the opinion of the High Court:

(2.) BOTH these references are made at the instance of the Commissioner of Wealth-tax, Patiala-1, and the question of law arises out of the orders of the Income-tax Appellate Tribunal, Patiala Bench, relating to the assessment of two individuals who are partners in two firms, namely, M/s. Sunder Lal Choudhry Mal, Shimla, and M/s. Shimla Roller Flour Mills, Shimla. The assesssments related to the year 1971-72. BOTH the firms had fixed deposits in a banking company governed by the Banking Regulation Act, 1949. The firms' assets included also Post Office National Savings Certificates. The assessees claimed exemption in respect of their respective shares in the Post Office National Savings Certificates under Section 5(1)(xvi) and in respect of the bank deposits under Section 5(1)(xxvi) of the Act. The Wealth-tax Officer rejected the plea for exemption on the ground that the investments in the shape of fixed deposits and National Savings Certificates were not made by the respective assessees and the net wealth of the firms was assessed under Rule 2 of the Wealth-tax Rules taking into account also the bank deposits and the National Savings Certificates. The orders of the Wealth-tax Officer were affirmed in appeal by the Appellate Assistant Commissioner. In further appeal at the instance of the respective assessees, the Tribunal has allowed the above exemption claimed in computing the net wealth of the respective assessees.

(3.) IN Dulichand Laxminarayan v. CIT [1956] 29 ITR 535, the Supreme Court stated at page 541 :