1983 (2) TMI 99 - AT - Wealth-tax

Summary

Issues:
1. Inclusion of market value of car and balance deposit in assessee's net wealth.
2. Contention regarding the right under section 8 of the CDS Act as a property.
3. Determination of whether the right under section 8 constitutes an annuity.
4. Analysis of the commutability of the annuity.
5. Evaluation of whether the annuity was purchased by the assessee.

Analysis:

The case involved an appeal by the revenue against the AAC's order concerning the assessment year 1978-79. The WTO had initially determined the net wealth of the assessee at Rs. 11,13,700, which was later amended to Rs. 10,95,000. The dispute primarily revolved around the inclusion of the market value of a car and a balance deposit in the assessee's net wealth. The assessee contended that the car's value was exempt under specific sections of the Wealth-tax Act. The AAC ruled in favor of the assessee, but the Tribunal allowed the revenue's appeal, leading to a subsequent recall of the order for rehearing.

Regarding the assessee's right under section 8 of the CDS Act, the revenue argued that the deposit constituted an asset. The Tribunal analyzed whether this right could be considered an annuity and if it was commutable. The Tribunal concluded that the payment under section 8 was fixed and not dependent on the fund's general income, meeting the criteria for an annuity. The proviso to section 8, concerning extreme hardships, did not imply general commutability of the right.

The revenue also contended that for the annuity to be excluded from the definition of 'assets,' it must not have been purchased by the assessee. The Tribunal agreed with the assessee that the term 'purchase' differed from 'acquired,' and the right to annuity was acquired, not purchased. As the Legislature used 'purchased' in a distinct context, the right under section 8 was not considered an asset under section 2(e)(2), and valuation at its discounted value was unnecessary.

The Tribunal dismissed the appeal, noting that the WTO had previously allowed exemption for the car value in other assessment years, maintaining consistency. Therefore, a different approach was unwarranted. The arguments on the car's exemption were deemed unnecessary due to the preceding reasoning.