9911796707
TMI Blog1986 (9) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... account in the calculation of the net wealth ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that initiation of proceedings under section 17(1)(a) of the Act was perfectly justified ? " The facts necessary to be noticed for the disposal of this reference briefly stated are : that the assessee, Smt. Hoolas Devi, was assessed to wealth-tax for the assessment years 1965-66 to 1971-72 for different amounts of wealth pertaining to each assessment year. Those cases which were completed and finalised were reopened by the Wealth-tax Officer under section 17(1)(a) of the Act on the following grounds: (a) that the assessee has been made entitled to receive a monthly payment of Rs. 1,000 fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituting property because the annuity is commutable. The departmental nominee has frankly conceded before the Tribunal that it is an annuity. This fact was earlier disputed before the Appellate Assistant Commissioner and the Appellate Assistant Commissioner held that it is an annuity and it is not commutable but before the Tribunal the departmental nominee conceded that although the payment of Rs. 1,000 monthly to the assessee is an annuity but as it is commutable, it becomes " property " as per section 2(e) of the Act. To find out whether such an annuity is commutable, it will be proper to refer to the intent of the testator which has been expressed in the will (annexure.C). This particular payment finds place in para. 20(d)(1) of the will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not payable from out of the capital, then such an entitlement is an annuity which is exempted under section 2(e)(1)(iv) of the Act. It is not the case of the Department that this annuity has been converted into a lump sum grant. No such provision has been made in the will that this annuity can be converted into a lump sum grant. Our attention was invited to a decision of the Bombay High Court in CWT v. Hirji Cowasji Jahangir [1981] 129 ITR 642, wherein a Division Bench of the Bombay High Court has held that the question whether in the case of an annuity, the value thereof could not be included in the net wealth of an assessee under section 2(e)(1)(iv) of the Wealth-tax Act, does not necessarily get answered in favour of the Revenue merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " assets ". Such preclusion may be by the express terms of the contract or may arise by implication. In this case, the amount of Rs. 1,000 has been made payable monthly out of the income and and it has been made the first charge on the income of the trust. Thus, by necessary implication, it is very clear that the amount has to be paid only month by month and this payment will be the first charge on the income of the capital investment made by the trust, and thus, by necessary implication, its commutation is ruled out. In CWT v. Arundhati Balkrishna [1970] 77 ITR 505, their Lordships of the Supreme Court have been pleased to observe as follows (at page 509): " Ordinarily, an annuity is a money payment of a fixed sum annually made and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r it would fetch if sold in the open market on the valuation date. Thus, it is clear that the assets must be saleable and it must have a market value judged from that angle, this monthly payment of maintenance is not saleable and it cannot fetch any value in the open market and, therefore, it is an annuity and not an asset. In this view of the matter, we hold that in the facts and circumstances of the case, the Tribunal was correct in holding that the annuity of Rs. 1000 per month is not commutable and that it should be left out of account in calculation of the net wealth. So far as the second question referred to us by the Tribunal is concerned, it does not survive for decision because, firstly, it was a plea based on three grounds, two ..... X X X X Extracts X X X X X X X X Extracts X X X X
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