1987 (4) TMI 35 - HC - Wealth-tax

Summary

Issues:
1. Inclusion of the market value of shares settled in trust in the net wealth of the assessee under the Wealth-tax Act, 1957.
2. Applicability of section 4(1)(a)(iii) regarding the transfer of shares to family trusts.
3. Interpretation of sections 4 and 21 of the Wealth-tax Act, 1957.
4. Exemption under section 5(1)(viii) for jewellery and ornaments held for personal use.

Analysis:
1. The judgment pertains to the assessment years 1964-65 and 1965-66, where the Wealth-tax Officer included the market value of shares settled in trust by the assessee for his minor daughters in the net wealth of the assessee. The Appellate Assistant Commissioner and the Tribunal upheld this inclusion, invoking section 4(1)(a)(iii) of the Wealth-tax Act, 1957.

2. The court was tasked with answering two questions: one raised by the Revenue regarding the exclusion of shares settled in family trusts from the assessee's net wealth, and another raised by the assessee concerning the inclusion of shares transferred to different family trusts under section 4(1)(a)(iii). The court examined the provisions of sections 4 and 21, emphasizing that section 21 applies when assessing trustees, while section 4 mandates the inclusion of assets transferred without adequate consideration for the benefit of minor children in the settlor's net wealth.

3. The court considered the argument based on the Supreme Court's judgment in CWT v. Trustees of H. E. H. Nizam's Family Trust, highlighting the distinction between sections 4 and 21. It concluded that the assets transferred by the assessee to the trustees for the benefit of his minor children must be included in his net wealth as per section 4(1)(a)(iii), thus ruling in favor of the Revenue on both questions.

4. Additionally, the judgment addressed questions raised by the assessee regarding exemption under section 5(1)(viii) for jewellery and ornaments. The court declined to answer the first question, focusing on the retrospective amendment of section 5(1)(viii) and ruled in favor of the Revenue on the second question based on precedent. The Tribunal was directed to consider relevant judgments in implementing the decision.

In conclusion, the court upheld the inclusion of shares settled in trust in the assessee's net wealth under section 4(1)(a)(iii) and ruled against the assessee's claim for exemption under section 5(1)(viii) for jewellery and ornaments, emphasizing the application of relevant provisions and legal precedents in its decision-making.