9911796707
TMI Blog1974 (4) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... The judgment of the court was delivered by P. N. KHANNA J.-In compliance with the directions of this court under section 27(3) of the Wealth-tax Act, 1957, the Income-tax Appellate Tribunal, Delhi Bench " C ", has drawn up a consolidated statement of the case and referred the following question to us for opinion : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the value of the assessee's right to acquire further equity shares which right he renounced in favour of his minor daughter was not includible in the assessee's net wealth under section 4(1)(a)(ii) of the Wealth-tax Act, 1957 ? " The relevant assessment years are 1958-59 to 1962-63 and the valuation dates corresponding thereto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook the view that the said " right " got extinguished and ceased to exist as soon as the minor acquired the shares. As such, there was no asset, the value of which was required to be computed in ascertaining the net wealth of the assessee. The appeal was accepted and the additions made by the Wealth-tax Officer were excluded from the computation of net wealth of the assessee. The application of the Commissioner of Wealth-tax, for reference of the question already referred to above to this court, was also dismissed by the Tribunal. On his application, this court, however, framed the above question and directed the Tribunal to state the case and refer it under section 27(3) of the Act. Mr. R. H. Dhebar, the learned counsel appearing on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether they were transferred otherwise than for valuable consideration and of their valuation on the valuation date, would arise only after such assets have been ascertained. According to the revenue, the assessee transferred his "right" to acquire shares at Rs. 10 per share, the market value of which on the date of transfer and on the valuation date was Rs. 40 per share. But what is the precise nature of the said " right " ? This "right" of a shareholder to acquire shares in case the company proposes to increase its subscribed capital by allotment of further shares is governed by section 81 of the Companies Act, 1956. According to clause (b) of its sub-section (1), the offer of further share is required to be made by notice limiting a t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase of the said shares offered or by not exercising the right within the limited time fixed for the purpose. The "right " in any case ceases to exist after the expiry of the time fixed for its exercise. In this case, after the renunciation by the assessee, the " right " to acquire the shares was exercised by his unmarried minor daughter and was exhausted on the said minor daughter purchasing the right shares immediately after the " rights " were transferred to her on May 30, 1957, and then on June 20, 1959. There is no dispute that on the last day of the calendar year, which is the valuation date for each of the assessment years in question, these rights had already been exercised, and the shares offered had been purchased. The "righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be included in the net wealth of the assessee. The said right, as already noticed, was exhausted and extinguished as soon as the minor daughter purchased the shares. No such right to acquire any further shares existed in her hands on the valuation date. Mr. Dhebar contended that the shares held by the daughter should be taken as the asset, though of a somewhat different nature, which was transferred to her by the assessee. This contention is not sound. The language of the section clearly shows that the value has to be ascertained of " such assets " as have been transferred by the assessee to the minor and which are held by the minor on the valuation date. In this case, the minor was holding shares and not the " rights " which the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intended to include in the net wealth of the assessee "such" asset only which was actually transferred by the said assessee to his minor child (not being a married daughter) without adequate consideration. Further, the question before us, as already noticed, is whether the Tribunal was right in not including in the assessee's net wealth, the value of his " right to acquire further equity shares ", which was renounced by him in his daughter's favour. No question has been asked about any claim for inclusion in his net wealth, the value of "the equity shares" purchased by the daughter. Mr. Dhebar's contention, accordingly, is not sound. The Tribunal, in our opinion, was, therefore, right in holding that on the valuation date " the right " had ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
