9911796707
|
Home
Issues:
Interpretation of section 4(1)(a)(ii) of the Wealth Tax Act, 1957 regarding gifts made to minor children and whether such gifts are includible in the net wealth of the assessee. Analysis: The case involved six brothers who made gifts of Rs. 50,000 each to the minor children of their siblings on the same day. The Wealth Tax Officer (WTO) deemed these gifts as collusive and sham transactions, including the amounts in the assessee's total wealth under section 4(1)(a)(iii) of the Act. The Appellate Authority Commissioner (AAC) upheld the decision, considering the transactions as part of a deliberate tax avoidance scheme. However, the Tribunal overturned the orders, noting the absence of the term "indirectly" in section 4(1)(a)(ii) concerning gifts to minor children. The Tribunal highlighted the legislative intent behind the omission and the subsequent amendment in 1964 to clarify indirect transfers to minors. The key question was whether the gifts made by the uncles to their nephews and nieces should be included in the net wealth of the assessees under section 4(1)(a)(ii). The court emphasized the difference in language between clauses (a)(i) and (a)(ii), where the term "directly or indirectly" was present in the former but omitted in the latter. This distinction indicated that only direct transfers to minor children fell within the scope of section 4(1)(a)(ii) before the 1964 amendment. The court also considered the legislative history and the clarificatory nature of the amendment, leading to the conclusion that indirect gifts to minor children were not taxable under the Act prior to the amendment. The court ultimately ruled in favor of the assessees, holding that the gifts made by the uncles to their nephews and nieces were not includible in their net wealth for the assessment year 1963-64. The court's decision was based on a strict interpretation of the statutory language and the legislative intent behind the omission of "indirectly" in section 4(1)(a)(ii) before the subsequent amendment. The revenue was directed to bear the costs of the assessees.
|
