1972 (12) TMI 17 - HC - Wealth-tax

Whetherthe inclusion of the movable assets belonging to Lakshmikanthammal, the wife of the assessee, in the taxable wealth of the assessee is lawful - Whetherthe movable assets of Lakshmikanthammal, are liable to be included in the taxable wealth of the assessee in view of or having regard to section 4(4) - assessee also contends that the Tribunal has not considered the applicability of section 4(4) of the Wealth-tax Act to movable properties standing in the name of the assessee s wife, though that section was applied and relief granted in respect of immovable properties. But on the finding given by the Tribunal that the movable properties consisting of advances and investments are benami and that the assessee continued to be the beneficial owner of the same, there is no question of applying section 4(4) as there was in fact no transfer before the coming into force of the Act in relation to movable properties and the Tribunal is justified in not applying section 4(4) so far as the movable properties are concerned - Reference answered in the affirmative

Summary

Issues:
- Whether the inclusion of movable assets belonging to the assessee's wife in the taxable wealth of the assessee is lawful?
- Whether the movable assets of the assessee's wife are liable to be included in the taxable wealth of the assessee under section 4(4) of the Wealth-tax Act?

Analysis:
The case involved the assessment of the net wealth of an assessee who had not included properties standing in his wife's name in his wealth declaration. The Wealth-tax Officer concluded that investments in the wife's name were actually made by the assessee, leading to the inclusion of those assets in the assessee's net wealth. The Appellate Assistant Commissioner upheld this decision, stating that no transfer of funds was proven. The Tribunal found that while movable properties in the wife's name were justified to be included in the assessee's wealth, immovable properties were exempt under section 4(4) of the Wealth-tax Act.

The assessee argued that the Tribunal failed to consider section 4(4) regarding movable properties in the wife's name and overlooked evidence showing the properties as exclusively belonging to her. The Tribunal based its decision on the assessee's treatment of investments in his wife's name, indicating he was the beneficial owner. The Tribunal inferred that the investments were benami for the husband's benefit, supported by various facts, including the absence of a separate folio for the wife and no transfer of funds.

The High Court agreed with the Tribunal's findings, emphasizing that the question of benami is a factual matter. It cited precedents to support the Tribunal's factual inference on benami transactions. The Court also noted that since the investments were deemed benami, section 4(4) did not apply to movable properties, as no transfer had occurred before the Act came into force.

In conclusion, the High Court answered the reference in favor of the revenue, upholding the inclusion of movable assets in the assessee's wealth. The Court awarded costs to the revenue and reiterated the Tribunal's decision regarding the benami nature of the investments in the wife's name.