Wealth-tax exemption for merit or gallantry awards does not cover informer rewards paid for supplying information.

A reward paid to an informer for supplying information about concealment of excise duty was held not to qualify as an award for merit or gallantry under the wealth-tax exemption in section 5(1)(xviii) of the Wealth-tax Act, 1957. The court distinguished a payment made in return for information, and expected as consideration, from an award granted for a significant achievement or for gallant service beyond the call of duty. On that construction, the exemption did not apply and the amount remained liable to wealth-tax.

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Issues: Whether the amount received by an informer as a reward for supplying information about concealment of excise duty could be treated as an award for merit or gallantry so as to qualify for exemption from wealth-tax under section 5(1)(xviii) of the Wealth-tax Act, 1957.

Analysis: The amount was paid as a reward for information furnished to the Government and not as an award in recognition of a significant achievement over and above the call of duty. A reward made in return for information supplied, with an expectation of payment, is materially different from a meritorious or gallantry award contemplated by the exemption provision. The provision does not extend to such rewards.

Conclusion: The amount was not exempt under section 5(1)(xviii) of the Wealth-tax Act, 1957 and was liable to wealth-tax.

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