1975 (7) TMI 54 - HC - Wealth-tax

Summary

Issues:
Interpretation of section 4(1)(a)(iii) of the Wealth-tax Act, 1957 regarding the inclusion of assets in the net wealth of the assessee based on their original form or converted form.

Detailed Analysis:
The case involved a question on the interpretation of section 4(1)(a)(iii) of the Wealth-tax Act, 1957, concerning the valuation of assets for wealth tax purposes. The assessee had created two trusts for his minor daughters, settling amounts of Rs. 25,101 and Rs. 21,201, which were invested in shares. The Wealth-tax Officer included the market value of the shares (Rs. 75,610) in the assessee's net wealth, rejecting the assessee's argument to consider only the original settled amounts. This decision was upheld by the Appellate Assistant Commissioner but challenged before the Tribunal.

The Tribunal held that under section 4(1)(a)(iii), the value of the assets transferred by the assessee should be included in the net wealth, regardless of any changes in form or value of the assets post-transfer. The Tribunal emphasized that the assets' value at the time of transfer, in this case, cash amounts of Rs. 46,302, should be considered for wealth tax calculation. The revenue contended that the value on the valuation date should be based on the converted form of assets, not the original transferred assets.

The court analyzed the relevant provisions of the Wealth-tax Act, emphasizing that the value of assets held by the assessee on the valuation date is crucial for determining net wealth. The court noted that section 4(1)(a)(iii) focuses on assets transferred by the assessee, irrespective of any subsequent changes in form or value. The court highlighted that the language used in the Act indicates a clear intention to consider the original assets transferred, especially when the transfer involves cash amounts.

The court concluded that the Tribunal's interpretation of section 4(1)(a)(iii) was correct, stating that the value of the original assets transferred should be included in the net wealth calculation, even if the assets were converted into different forms post-transfer. Therefore, the court answered the question in the affirmative, holding that the revenue must pay the costs of the assessee.

In summary, the judgment clarified that for wealth tax purposes under section 4(1)(a)(iii) of the Wealth-tax Act, 1957, the value of assets to be included in the net wealth of the assessee is based on the original assets transferred, regardless of any subsequent changes in form or value.