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TMI Blog2014 (12) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of hearing, Shri Hiro Rai, ld. Counsel for the assessee did not press ground no. 1 i.e. upholding the validity of reassessment proceedings; consequently, this ground is dismissed as not pressed. 3. The only effective ground raised by the assessee pertains to confirming the addition of Rs. 2,28,88,530/- to the net wealth of the assessee holding that the residential house and jewellery purchased by the wife of the assessee from a loan given to her by the assessee were to be included in the net wealth of the assessee. The crux of arguments advanced on behalf of the assessee is that the entire effort of the Assessing Officer as well as of the ld. First Appellate Authority is that it is a tax avoidance by the assessee by submitting that for A.Y. 2006-07, the assessee paid Rs. 10,25,00,000/- as tax. Our attention was invited to section 4(1)(a) of the Wealth tax Act. It was contended that the assessee has given a loan to his wife which cannot be said to be a transfer of asset. Reliance was placed upon the decision from Hon'ble Karnataka High Court in 200 ITR 50 (Kar.) and 158 ITR 215 (Kol.). It was explained that money given to his wife has been duly recorded in books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut "transfer of asset" by an individual i.e. by the spouse, directly or indirectly, otherwise than for adequate consideration or in connection with an agreement to live apart. However, under facts available before us, the assessee filed return of wealth declaring wealth of Rs. 2,75,28,460/- on 30/3/2007, which was accepted by the Wealth tax Officer by passing an order dated 22/12/2008 u/s. 16 (3) of the Wealth tax Act. The wife of the assessee has taken cash loan of Rs. 2,28,88,530/-, from the assessee , for acquiring residential house at Delhi (Rs.1,65,95,000/-) and jewellery of Rs. 62,93,530/-. We are expected to analyze what exactly "asset" means. Section 2(ea) of the Wealth tax Act, 1957, inserted by the Finance Act, 1992, w.e.f. 1.4.1993, and later on substituted by the Finance (No.2) Act 1998, w.e.f. 1.4.1999, defines "asset". For ready reference we are reproducing the same hereunder :- "(ea) "assets", in relation to the assessment year commencing on the 1st Day of April, 1993, or any subsequent assessment year, means:- (i) Any building or land appurtenant thereto (hereinafter referred to as "house"), whether used for residential or commercial purposes or for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l asset" which means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include (i) any stock in trade; consumable stores or raw materials held for the purposes of his business or profession. (ii) personal effects, i.e. to say, moveable property (including wearing apparels and furniture) held for personal use by the assessee or any member of his family dependent on him. With the insertion of explanation for the purposes of the subclause "jewellery" has also been explained. In sub-clause (a) and (b) to sub-section (11 ) to sec.2, of the Income tax Act, "tangible asset" and "intangible assets" have been defined which does not include cash. The case of the Revenue is that interest free loan was given to his wife by the assessee to enable her to acquire the aforesaid asset, and thus, in view of section 4(1)(a)(i) such assets have been transferred by the assessee . We are not agreeing with the Assessing Officer because there is no "transfer of asset" by the assessee rather, an asset has been purchased in the form of a residential house after taking an interest free cash loan from the assessee. Thus, in our view, there is no t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present appeal uncontrovertedly interest free cash loan was given by the assessee to his wife, therefore, it cannot be said to be 'transfer of asset'. Section 64 of the Act, refers to, transfer made to legally wedded wife. It is worth quoting, as argued by the ld. Counsel for the assessee, that at the later stage part of the loan was re-paid by the wife to the assessee, therefore, repayment of part of the loan further strengthens the case of the assessee because it was a loan simplicitor and cannot be said to be a device to "transfer of asset" as has been alleged by the Revenue with the intention of tax avoidance. It is also noted that the assessee gave the loan to his wife and the same was duly declared, therefore, it is not a case of tax avoidance. There is a distinction between the term "transfer" and "loan" which can be appreciated by comparing the "act of transfer" with the act of "lending". In the former case some legal interest is created in the transferee over the subject matter of transfer, whereas in the case of lending, except a possessory interest, which may be momentary also, no other interest is created. In the case of immovable properties, a distinction of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the ld. Commissioner of Income tax (Appeals) has mentioned that it amounts to "indirect transfer" within the meaning of section 4(1)(a)(i) of the Wealth Tax Act. We find that sub-clause (i) also speaks about "to whom such assets have been transferred" by an individual. As discussed earlier there is no transfer of asset as such rather interest free loan was given by the assessee to his wife, therefore, from this angle also the assertion made by the ld. DR is on weak footing. 4.6 The Hon'ble Apex Court in CIT, Gujarat vs. Keshavlal Lallubhai Patel (55 ITR 637) (SC), wherein there was self acquired property thrown in common hotchpot of hindu undivided family, which was subsequently partitioned and shares were allotted to wife, and minor child. The question before the Hon'ble Court was whether there was transfer of asset directly or indirectly as per section 16(3)(a)(iii), (iv) of the Indian Income tax Act, 1922. The Hon'ble Apex Court held as under :- "i) that section 16(3) created an artificial income and had to be construed strictly, while coming to this conclusion the Hon'ble court followed the decision pronounced in Philip John Plasket Thomas vs. CIT (1963) 49 ITR (S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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