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TMI Blog1993 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... olding that under section 4(1)(a)(iii) of the Wealth tax Act, 1957, it is the value of the assets which have been actually transferred by the assessee that should be included in the net wealth of the assessee, the transferor, although the form of assets transferred had undergone a change since the date of the transfer, and the value thereof, on the valuation date, is different ?" The assessee, an individual, created two trusts, on February 18, 1957, and November 11, 1957, for the benefit of his two minor daughters. Thereby the respective amounts of Rs. 25,101 and Rs. 21,201 were settled upon trust and transferred to the trustees. After the trusts had been created, the trustees purchased shares out of the trust funds. On the valuation date, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its judgment (which is reported in CWT v. Kishanlal Bubna [1976] 103 ITR 56), said that the identification of the words "such assets" used in sub-clause (iii) was to be found in clause (a) of sub-section (1) of section 4. The assets which were contemplated in clause (a) were the assets held by the transferee to whom such assets had been transferred by the assessee. The words "such assets" indicated and pinpointed the specific assets as being those which had been transferred. That this was the intention was made very clear by the latter part of the section because it said "whether the assets referred to in any of the sub clauses aforesaid are held in the form in which they were transferred or otherwise". The object of this latter part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had gifted a sum of Rs. 90,000 to his wife who had constructed a house therefrom. The assessee claimed that the value of the assets to be included in his wealth-tax assessment was Rs. 90,000 only and not the actual value of the house on the valuation date. Counsel on his behalf laid stress on the word "such" qualifying the word "assets" occurring in the provision and contended that the words "such assets" must refer only to the sum of Rs. 90,000, which had been transferred by the assessee to his wife. The High Court was unable to place that construction on the word "such" qualifying the word "assets". It held that because of the specific provision at the end of sub-clause (v), namely, "whether the assets referred to in any of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt held that the income which could be brought to tax under section 16(3)(a)(iii) had to have a nexus with the assets transferred, directly or indirectly. Learned counsel urged that the object of section 16(3)(a)(iii) of the Indian Income-tax Act, 1922, was the same as that of section 4(1)(a)(iii) of the said Act, namely, that where assets had been transferred by an assessee to or for the benefit of his wife or minor child, such assets should continue to be treated as belonging to the assessee and all income derived from them should be treated as income derived by the assessee. The assessee, though served, has remained unrepresented. Reading section 4(1)(a)(iii) as a whole, we have no doubt that the provision contemplates that, where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e arising from an asset transferred to or for the benefit of an assessee's wife or minor child is treated as the income of the assessee. The interpretation placed by the impugned judgment, we may add, would, in given cases, make the provision well-nigh impossible to work when the assessee has transferred not money but an asset and that asset has been converted by the transferee into some other asset. An asset held neither by the assessee nor by the transferee on the valuation date could prove difficult to be valued. In the result, the appeal is allowed. The judgment under appeal is set aside. The question referred to the High Court is answered in the negative and in favour of the Revenue. There shall be no order as to costs. Appeal allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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