1991 (7) TMI 31 - HC - Wealth-tax

Summary

Issues: Interpretation of exemption under section 5(1)(xxxiii) of the Wealth-tax Act for a person of Indian origin returning to India before April 1, 1977.

In this judgment delivered by the High Court of Karnataka, the court addressed the issue of whether the Appellate Tribunal was justified in canceling the order passed by the Commissioner of Wealth-tax and allowing exemption under section 5(1)(xxxiii) of the Wealth-tax Act to an assessee who returned to India before April 1, 1977. The case involved a person of Indian origin, Dr. Advocate Ram A. Joshi, who returned to India in June 1972 with the intention of permanently residing in India. The assessee claimed exemption under section 5(1)(xxxiii) of the Act for the assessment years 1978-79 and 1979-80. The Wealth-tax Officer initially allowed the exemption, but the Commissioner of Wealth-tax set aside the order and directed a reassessment disallowing the exemption. The Income-tax Tribunal later canceled the Commissioner's order, leading to the reference to the High Court for clarification.

The court analyzed the relevant provision, clause (xxxiii) of sub-section (1) of section 5 of the Act, which exempts wealth tax for a person of Indian origin returning to India with the intention of permanent residence. The court noted that the exemption was introduced by the Finance Act, 1976, effective from April 1, 1977. The court interpreted that the exemption applies to individuals who returned to India by the time the provision came into operation, not only after that date. Therefore, the court held that the exemption under clause (xxxiii) of section 5(1) of the Act is applicable to a person of Indian origin who returned to India before April 1, 1977. Consequently, the court ruled in favor of the assessee, holding that the exemption was valid in this case.

The judgment clarifies the interpretation of the exemption provision under section 5(1)(xxxiii) of the Wealth-tax Act for individuals of Indian origin returning to India before April 1, 1977. The court's analysis focused on the timing of the individual's return concerning the enactment of the provision, emphasizing that the exemption is not limited to those returning after the provision's effective date. This decision provides guidance on the application of the exemption for similar cases and establishes a precedent for interpreting such provisions in wealth tax laws.