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Exemption under section 5(1A) of the Wealth-tax Act based on holding period of units in Unit Trust of India for the assessment year 1977-78. Analysis: The case involved the question of whether the assessee was entitled to exemption under section 5(1A) of the Wealth-tax Act for the assessment year 1977-78 based on the holding period of units in the Unit Trust of India. The Wealth-tax Officer rejected the claim of exemption as the units were held for less than six months ending with the valuation date. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal upheld this view. However, the Tribunal considered the provisions of section 32 of the Unit Trust of India Act, which provide for exemption notwithstanding the Wealth-tax Act. The Tribunal referred the question of law to the High Court. The High Court analyzed the provisions of section 5(3) of the Wealth-tax Act, which require assets to be held for at least six months for exemption. It noted that the assessee did not meet this requirement. However, the Court also considered section 32 of the Unit Trust of India Act, which overrides the Wealth-tax Act and grants exemption up to Rs. 25,000 for units held by individuals or Hindu undivided families. The Court emphasized that the overriding effect of the Unit Trust of India Act must be given due consideration. The Court held that the assessee was entitled to exemption under section 32 of the Unit Trust of India Act, despite not meeting the conditions of section 5(3) of the Wealth-tax Act. It emphasized that Parliament's intention to grant exemption for units not exceeding Rs. 25,000 must be respected. The Court concluded that the Tribunal was correct in granting the exemption and found no infirmity in its decision. Therefore, the question of law was answered in favor of the assessee, against the Revenue, with no order as to costs.
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