1982 (4) TMI 135 - AT - Wealth-tax

Summary

Issues:
1. Inclusion of compulsory deposit sums in the computation of the assessee's net wealth for assessment years 1978-79 to 1980-81.
2. Whether the deposits made under the Compulsory Deposit Scheme (CDS Act) constituted the assessee's asset.
3. Exemption under section 5(1) of the Wealth-tax Act, 1957 for the compulsory deposits.
4. Exemption under clause (viii) of section 5(1) for assets intended for personal or household use.

Analysis:

1. The dispute revolved around the inclusion of sums deposited under the Compulsory Deposit Scheme in the computation of the assessee's net wealth for the assessment years 1978-79 to 1980-81. The WTO included the deposit amounts in the net wealth calculation, citing previous Tribunal judgments upholding similar decisions. The AAC accepted the inclusion for the latter two years based on previous rulings but allowed an exemption for the assessment year 1978-79 due to the purchase of an annuity. The revenue appealed for 1978-79, while the assessee appealed for the other two years.

2. The main contention was whether the deposits made under the CDS Act constituted the assessee's asset. The WTO considered the fresh deposits as the assessee's assets, but the AAC allowed an exemption under section 2(e)(2)(ii) for the annuity purchased with the deposits. The Tribunal rejected the argument that the deposits ceased to be the assessee's property, stating that the statutory rights acquired through the deposits constituted property under the law. The Tribunal also analyzed the components of the statutory right and concluded that it did not qualify as an annuity under the relevant provisions.

3. The assessee argued for exemption under section 5(1) based on the new provision in section 7A of the CDS Act. However, the Tribunal rejected this argument, stating that the legal fiction in section 7A did not alter the nature of the statutory right acquired through the deposits. The Tribunal reaffirmed the earlier decision and denied the assessee's claim for exemption under section 5(1) for the assessment years 1979-80 and 1980-81.

4. Another issue involved the assessee's claim for exemption under clause (viii) of section 5(1) for two cars owned, intended for professional use, and on which depreciation had been claimed. The WTO included the written down value of the cars in the net wealth calculation, denying the exemption. The AAC allowed exemption for one car based on a circular but the Tribunal disagreed, stating that the circular did not apply to clause (viii). The Tribunal emphasized that business assets, even if used partially for personal purposes, do not qualify for exemption under clause (viii). The revenue's appeal was allowed, and the assessee's appeals were dismissed.

In conclusion, the Tribunal upheld the inclusion of compulsory deposit sums in the net wealth calculation, rejected the exemption claims under section 5(1), and denied the exemption under clause (viii) for assets used for professional purposes.