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TMI Blog1977 (1) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... account of this property presumably under section 4(1)(a)(i) of the Wealth-tax Act, 1957. The assessee contested this inclusion in appeal. Before the Appellate Assistant Commissioner, the assessee contended that the Wealth-tax Officer ought to have included under section 4(1)(a)(i) only the value of the asset transferred after April 1, 1956, that is, Rs. 90,000, and not the entire value of the house to the extent of Rs. 1,60,000 and the Wealth-tax Officer erred in not allowing exemption for this asset under section 5(1)(iv) of the Act. The Appellate Assistant Commissioner held that the asset that had to be included was that which on the valuation date was held by the wife of the assessee to whom it had been transferred by the assessee othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the facts and in the circumstances of the case, the Tribunal was justified in holding that under the provisions of section 4(1)(a)(i) of the Wealth-tax Act, 1957, the sum of Rs. 1,60,000 was properly included for assessment instead of Rs. 90,000 being cash gifted by the assessee to his wife? 2. If the answer to question No. 1 above is in the affirmative, whether the Tribunal was justified in holding that the assessee was not entitled to the exemption under section 5(1)(iv) of the Wealth-tax Act, 1957, as regards the said inclusion of Rs. 1,60,000 ? " Let us take the first question first. The answer to this question depends upon the interpretation of section 4(1)(a) of the Wealth-tax Act, 1957. Section 4(1)(a)(i), as far as it is rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wealth of the assessee. As against this, the case of the revenue which has been accepted by the Tribunal is that the sum of Rs. 90,000 which was transferred by the assessee to his wife has been now converted into the existing asset of the house and it is the value of the house, which alone is existing as an asset as on the valuation date, that has to be included in the net wealth of the assessee. We are of the opinion that the contention of the revenue which has been accepted by the Tribunal is correct. The section itself says that the value of the asset to be included should be the asset which is held on the valuation date by the spouse. The only other question is whether the value of the asset as on the valuation date has to be taken in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 90,000 which alone was transferred by the assessee to his wife, and, therefore, its value can only be Rs. 90,000. We are unable to place any such construction on the word " such " qualifying the word " assets ". Normally speaking, but for the provision at the end of sub-clause (v) which we have extracted, section 4(1)(a)(i) would have required the continued existence of the asset transferred by the husband to the wife in the same form in which it was transferred. Because of the specific provision at the end of clause (v) which we have extracted, it is not now necessary that the asset transferred should be the same as the asset held by the spouse on the valuation date. The word " such " merely indicates the correlation between the asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of such original assets to be determined as on the valuation date. The Bombay High Court did not accept these contentions advanced on behalf of the revenue. The court pointed out--See [1976] 103 ITR 56, 59 (Bom): " Mr. Joshi (counsel for the revenue) is undoubtedly right that under section 4(1)(a), the value of assets which on the valuation date are held is to be included in computing the net wealth of an individual but such a provision is not to be seen in isolation but must be read in conjunction with the other provisions. Such other provisions are contained in Sub-clauses (i), (ii) and (iii) of clause (a). Sub-clause (i) deals with the assets transferred to the spouse of an individual and there also reference is made to " such asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the value of the assets that are transferred that is to be determined as on the relevant valuation date." With respect, we are unable to agree with the above reasoning and conclusion of the Bombay High Court. The decision of the Bombay High Court leads to this anomaly, namely, the value to be included in the net wealth of the assessee is the value of an asset which is no longer in existence and though the existence of the different form of the asset on the valuation date is to be taken note of for the purpose of the liability to inclusion of the value of the asset under section 4(1)(a), its value as on the date of the valuation is completely ignored. The learned counsel for the assessee submitted that the conclusion which the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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