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Issues Involved:
1. Whether the fixed deposit blocked account in a Ceylonese bank should be valued under section 7(1) of the Wealth-tax Act, 1957. 2. Whether the fixed deposit in the blocked account qualifies as "cash" for wealth-tax purposes. Issue-wise Detailed Analysis: 1. Valuation under Section 7(1) of the Wealth-tax Act, 1957: The core issue was whether the fixed deposit blocked account of the assessee in a Ceylonese bank should be valued under section 7(1) of the Wealth-tax Act, 1957. The Tribunal held that the fixed deposit, due to its restrictive nature, was not equivalent to cash and thus required proper valuation under section 7(1). The Tribunal's decision was based on the premise that the fixed deposit in a blocked account, subject to certain restrictions, could not be treated as cash, even though it was a taxable asset. The Tribunal concluded that the fixed deposit should be evaluated considering the restrictions imposed by the Ceylonese exchange control authorities. 2. Qualification as "Cash": The next question was whether the fixed deposit in the blocked account could be considered "cash" for wealth-tax purposes. The Wealth-tax Officer (WTO) included the entire value of the fixed deposit in the assessee's net wealth, treating it as cash. However, the Tribunal disagreed, asserting that the fixed deposit, due to its restrictive conditions, was not readily available for use and thus could not be treated as cash. The Tribunal's view was that the term "cash" should be interpreted in a restricted sense, meaning ready money available without any formalities. The court examined the legislative intent behind section 7, emphasizing that the valuation should reflect the market value of assets, i.e., the price a willing seller would realize from a willing buyer. The court noted that an exception clause, such as the one for cash assets, should be strictly construed. The court found that the WTO's interpretation of "cash" was too broad and did not align with the legislative intent of section 7. The court also referred to various legal principles and precedents to support its conclusion. It highlighted that assets subject to encumbrances or restrictive covenants should not be valued at face value but should be evaluated by deducting the estimated value of the disadvantages or restrictions attached to them. The court cited decisions indicating that the term "cash" should be interpreted contextually, considering the legislative intent and the specific circumstances of each case. The court concluded that the fixed deposit in the blocked account could not be considered "cash" because it was not readily available for the assessee's use and was subject to restrictive covenants under the foreign exchange regulations of Ceylon. Therefore, the court held that the amount in the fixed deposit should not be included in the net assessable wealth of the assessee at its face value but should be evaluated considering the restrictions. Conclusion: The court affirmed the Tribunal's decision that the fixed deposit in the blocked account should be valued under section 7(1) of the Wealth-tax Act, 1957, and should not be treated as cash for wealth-tax purposes. The court emphasized that the valuation should reflect the market value of the asset, considering any restrictive covenants or disadvantages attached to it. The court's decision was based on a strict interpretation of the exception clause for cash assets and the legislative intent behind section 7. The court concluded that the fixed deposit in the blocked account did not qualify as cash because it was not readily available for use and was subject to restrictive conditions. The court answered the question in favor of the assessee and against the Revenue.
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