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Appeal against addition to wealth in wealth-tax assessment for the assessment year 1976-77. Analysis: The appeal was filed objecting to the addition of Rs. 1 lakh to the wealth in the wealth-tax assessment for the assessment year 1976-77. The assessee had gifted a sum of Rs. 1 lakh to her son-in-law, which was done through book entries in the firm's accounts. The Wealth Tax Officer (WTO) added this amount under section 4(5A) of the Wealth-tax Act, 1957, despite the gift being assessed for gift-tax purposes. The addition was confirmed in the first appeal. The representative for the assessee argued that section 4(5A) did not apply to the case as it was a tripartite arrangement, and there was a valid assignment of actionable claim. The departmental representative contended that even valid gifts could be ignored for wealth-tax purposes under section 4(5A) to counter tax avoidance through book entries without actual transfer of money. The Tribunal found that the gift was valid in law, even though it was by book entries, and involved three parties - the donor, the firm, and the donee. The Tribunal noted that the gift was recognized by all parties involved, and the donee had accepted it for income-tax and wealth-tax purposes. The Tribunal disagreed with the departmental representative's interpretation of section 4(5A) and held that the provision did not apply to the present case as it was not a unilateral gift by book entries. The Tribunal concluded that there was no tax avoidance involved and deleted the addition to the wealth, annulling the assessment as the wealth fell below the taxable limit after the deletion. The appeal was allowed in favor of the assessee.
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