Retrospective amendment to trust contributions excluded recalled amounts from wealth-tax valuation under the statutory recall right.

Retrospective amendment to section 40A(11) operated on the relevant valuation dates, and the employer's statutory right to recall unutilised contributions had to be recognised for wealth-tax purposes. Once that right existed and was exercised shortly after the amendment, the sums held by the trust could not be treated as its absolute assets on those dates. The assessing authorities were required to give effect to the retrospective legal change when determining the trust's wealth, so the amounts were not includible in the trust's wealth. The issue was answered in favour of the assessee and against the Revenue.

---

---

Issues: Whether the retrospective amendment to section 40A(11) of the Income-tax Act, 1961, together with the employer's recall of unutilised contributions, reduced the wealth of the trust as on the relevant valuation dates.

Analysis: The amendment was held to be retrospective and therefore operative on the valuation dates. Once the employer had been given the statutory right to recall the unutilised contribution, and had in fact exercised that right shortly after the amendment, the amounts lying with the trust could not be treated as belonging to it absolutely on the valuation dates. The assessing authorities were bound to give effect to the retrospective amendment and could not ignore its legal consequences while determining the trust's wealth.

Conclusion: The retrospective amendment was applicable to the relevant valuation dates and the amounts in question were not includible in the trust's wealth as its absolute assets; the question was answered in favour of the assessee and against the Revenue.

---