1993 (11) TMI 88 - AT - Wealth-tax

Summary

Issues Involved:
1. Ex parte decision by the CWT (Appeals).
2. Inclusion of the value of the assessee's Stock Exchange membership card as an asset under the Wealth-tax Act for assessment years 1988-89 and 1989-90.

Detailed Analysis:

1. Ex parte Decision by the CWT (Appeals):

The assessee challenged the ex parte decision made by the CWT (Appeals). The Tribunal reviewed the procedural aspects and the relevant rules and bye-laws of the Bombay Stock Exchange as considered by the CWT (Appeals). The Tribunal found no procedural irregularities or violations that would warrant overturning the ex parte decision. Therefore, the ex parte decision by the CWT (Appeals) was confirmed.

2. Inclusion of the Value of the Assessee's Stock Exchange Membership Card as an Asset:

The primary contention was whether the Stock Exchange membership card should be considered a property under section 2(e) of the Wealth-tax Act. The assessee argued that the membership was a personal privilege and not a transferable right, relying on the Bombay High Court's decision in Mrs. Sejpal R. Dalai v. Stock Exchange. The High Court had opined that the membership constituted a personal permission and was inalienable, thus not qualifying as property.

The CWT (Appeals) distinguished this case from the one relied upon by the assessee, emphasizing that the membership card bestowed certain rights and privileges, could be transferred by nomination, and had value, especially in cases of forfeiture where the sale proceeds could offset liabilities.

The Tribunal examined the relevant rules and bye-laws of the Bombay Stock Exchange:
- Rule 5: Membership constitutes a personal permission from the Exchange.
- Rule 6: Membership is inalienable.
- Rule 11: Allows nomination by existing members and legal heirs under certain conditions.
- Rule 17: Specifies conditions of eligibility for membership.
- Rule 18: Details qualifications for membership.

The Tribunal noted that while the membership was described as a personal privilege and inalienable, the rules allowed for nomination and transfer under specific circumstances, thereby conferring a certain value to the membership. The Tribunal also referenced the Supreme Court's view that the term "property" is of broad import and includes rights that may not be traditionally transferable.

The Tribunal concluded that the membership card had value and could be considered property under section 2(e) of the Wealth-tax Act. The argument that the membership was akin to professional memberships (e.g., Chartered Accountants or Medical Association) was dismissed, as the Stock Exchange membership allowed for nomination and transfer, unlike professional memberships which required specific qualifications.

Conclusion:

The Tribunal upheld the inclusion of the Stock Exchange membership card's value as an asset under the Wealth-tax Act. The appeals by the assessee for the assessment years 1988-89 and 1989-90 were dismissed, confirming the CWT (Appeals) ex parte order and the addition of Rs. 5,75,500 and Rs. 6,75,500 for the respective assessment years.