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Issues: Interpretation of s. 5(1A) of the W.T. Act, 1957 regarding exemption of assets invested in National Defence Certificates and Defence Deposit Certificates.
Analysis: The judgment delivered by the High Court of Kerala pertains to two references made by the Income-tax Appellate Tribunal, Cochin Bench, concerning the interpretation of s. 5(1A) of the Wealth Tax Act, 1957. The primary question in both references was whether the assessee is entitled to exemption of Rs. 70,000 invested in National Defence Certificates and Defence Deposit Certificates in addition to the overall exemption of Rs. 1,50,000 granted under s. 5(1) of the Act. The factual background of the case involved two separate assessees, both holding these certificates and claiming exemption beyond the prescribed limit. The Tribunal had allowed the exemptions, leading to the references to the High Court for clarification. In analyzing the legal provisions, the court examined s. 5(1) and s. 5(1A) of the Act to determine the scope and limit of exemption for assets like National Defence Certificates and Defence Deposit Certificates. The court highlighted that the maximum investment limit for National Defence Certificates was Rs. 35,000 as specified by the Government. Section 5(1A) imposes a cap of Rs. 1,50,000 for exemption from net wealth for specific assets listed in clauses (xv), (xvi), and others. The proviso under s. 5(1A) allows for an increase in the exemption limit if the assets held prior to March 1, 1970, exceed the prescribed limit. The court emphasized the clear and specific language of the proviso, stating that the exemption limit shall only be raised by the amount of such excess, rejecting any interpretation based on legislative intent beyond the statutory language. Ultimately, the court answered the questions referred in the negative, favoring the department and denying the additional exemptions claimed by the assessees. No costs were awarded in the judgment, and a copy of the decision was to be forwarded to the Income-tax Appellate Tribunal, Cochin Bench, as per legal requirements. The judgment provides a detailed analysis of the statutory provisions and sets a precedent for the interpretation of exemption limits under the Wealth Tax Act, 1957.
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