9911796707
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Issues Involved:
1. Tax liability on notional capital gains for the assessment years 1967-68 to 1972-73. 2. Inclusion of the value of gold ornaments in the net wealth for the assessment years 1967-68 to 1971-72. 3. Classification of the right to receive Rs. 1,000 per month under a deed of settlement as an annuity. 4. Exclusion of the capitalized value of the annuity from the net wealth if it precludes commutation into a lump sum grant. Detailed Analysis: Issue 1: Tax Liability on Notional Capital Gains The court addressed whether the tax liability on notional capital gains arising from the notional sale of shares held by the assessee was deductible as a debt under section 2(m) of the Wealth-tax Act, 1957, while computing her net wealth for the assessment years 1967-68 to 1972-73. The court concluded that this issue was covered by its earlier judgment in Smt. Radhadevi Mohatta v. CWT [1981] 129 ITR 229, and thus, the question was answered in the negative and in favor of the Revenue. Issue 2: Inclusion of Gold Ornaments in Net Wealth The court examined whether the value of gold ornaments amounting to Rs. 16,872 was includible in the 'net wealth' of the assessee for the assessment years 1967-68 to 1971-72. This issue was also covered by a previous judgment in CWT v. Godavaribai R. Podar [1988] 169 ITR 245. Consequently, the court answered this question in the negative and in favor of the assessee. Issue 3: Classification of Right to Receive Rs. 1,000 per Month as Annuity The court analyzed whether the right of the assessee to receive Rs. 1,000 per month under a deed of settlement dated December 11, 1952, constituted a right to an annuity within the meaning of section 2(e)(1)(iv)/section 2(e)(2)(iii) of the Wealth-tax Act, 1957. The court considered multiple judicial interpretations of the term "annuity." It concluded that an annuity is a right to receive a fixed sum periodically, which need not necessarily be charged personally on the grantor but can be payable out of the income of a trust fund. The court observed that the fixed amount of Rs. 1,000 per month payable to the assessee from the trust fund met the criteria for an annuity. The court referred to several judgments, including CWT v. Arundhati Balkrishna [1970] 77 ITR 505 (SC), which emphasized that an annuity is a predetermined fixed amount payable periodically, and not an aliquot share in the income of a fund. The court also examined the Wealth-tax Officer's and the Appellate Assistant Commissioner's earlier views, which had misinterpreted the Supreme Court's judgment, leading to the erroneous conclusion that the amount was not an annuity. The court clarified that the right to receive Rs. 1,000 per month from the trust fund was indeed an annuity. Issue 4: Exclusion of Capitalized Value of Annuity from Net Wealth The court then addressed whether the terms and conditions of the annuity precluded its commutation into a lump sum grant, which would result in its exclusion from the net wealth of the assessee. The court held that there need not be an express provision in the trust deed precluding commutation; an implied preclusion based on the terms and conditions of the trust deed would suffice. The court referred to the judgment in Nawab Sir Mir Osman Ali Khan v. CWT [1986] 162 ITR 888, which supported the view that implied preclusion is sufficient. The court concluded that the terms of the trust deed, which provided for the payment of Rs. 1,000 per month to the assessee during her lifetime with the corpus being handed over to another beneficiary only after her death, impliedly precluded the commutation of the annuity into a lump sum grant. Therefore, the annuity was exempt from the levy of wealth-tax. Conclusion: The court answered: 1. Question No. 1 in the negative and in favor of the Revenue. 2. Question No. 2 in the negative and in favor of the assessee. 3. Question No. 3 in the affirmative and in favor of the assessee. 4. Question No. 4 in the affirmative and in favor of the assessee. There was no order as to costs.
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