1996 (2) TMI 90 - HC - Wealth-tax

Issues Involved:
1. Interpretation of section 5(1)(xxxiii) of the Wealth-tax Act, 1957.
2. Applicability of exemption under section 5(1)(xxxiii) for assessment years 1979-80, 1980-81, and 1981-82.
3. Treatment of assets acquired from remittances made before the assessee's return to India.
4. Consideration of Circular No. 411 dated February 25, 1985, in interpreting the statutory provision.

Issue-wise Detailed Analysis:

1. Interpretation of section 5(1)(xxxiii) of the Wealth-tax Act, 1957:
The core issue revolves around the interpretation of section 5(1)(xxxiii) of the Wealth-tax Act, 1957. The section provides an exemption for "moneys and the value of assets brought by him into India and the value of the assets acquired by him out of such moneys." The court emphasized that the provision is meant to exempt certain assets from the rigors of the Wealth-tax Act. The language of the statute does not restrict the exemption to assets brought along with the assessee at the time of return to India. Instead, it includes assets acquired out of the remittances made during the period of ordinary residence in a foreign country.

2. Applicability of exemption under section 5(1)(xxxiii) for assessment years 1979-80, 1980-81, and 1981-82:
For the assessment year 1979-80, the assessee's claim for exemption was rejected because the assets were not acquired with funds brought into India at the time of his return. However, for the assessment years 1980-81 and 1981-82, the Wealth-tax Officer allowed the exemption for Rs. 11,95,642, which was the amount brought by the assessee at the time of his return. The appellate authority partially accepted the claim, extending the exemption to assets acquired from the amount brought to India and remittances lying in the Non-resident (External) account but denied it for assets acquired from amounts remitted before his arrival.

3. Treatment of assets acquired from remittances made before the assessee's return to India:
The court clarified that the exemption under section 5(1)(xxxiii) also covers assets acquired from remittances made before the assessee's return to India. Explanation 2 of the section deems monies in the Non-resident (External) account as monies brought into India on the date of return. Therefore, assets acquired from such remittances are also eligible for exemption. The court rejected a restricted interpretation that would limit the exemption to assets physically brought along at the time of return.

4. Consideration of Circular No. 411 dated February 25, 1985:
The Tribunal considered Circular No. 411, which clarified that remittances and assets originating from the foreign earnings of a person of Indian origin should be exempt from wealth tax. The court noted that the circular supports the broader interpretation of section 5(1)(xxxiii), endorsing the view that remittances and assets acquired from such remittances during the period of ordinary residence abroad are exempt.

Conclusion:
The court concluded that the assessee is entitled to claim exemption for the monies and assets acquired from such monies, whether brought at the time of return or remitted earlier and lying in the Non-resident (External) account. The question referred was answered in the negative, against the Revenue, and in favor of the assessee. The judgment emphasized that statutory provisions for exemption should be interpreted in a manner that aligns with their purpose, avoiding a restricted approach.

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