Non obstante override for UTI units preserved wealth-tax exemption despite failure to meet the six-month holding condition.

Units of the Unit Trust of India were treated as exempt from wealth-tax where the special non obstante provision in the Unit Trust of India Act overrode the general conditions in the Wealth-tax Act. Although section 5(3) of the Wealth-tax Act ordinarily required the assets to be held for at least six months ending with the valuation date, section 32(1)(ba) of the Unit Trust of India Act expressly provided that wealth-tax was not payable on units up to the prescribed monetary limit. Because the units fell within that limit, the six-month holding requirement did not prevent exemption.

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Issues: Whether exemption on units of the Unit Trust of India was available under the Wealth-tax Act notwithstanding non-compliance with the six-month holding requirement, in view of the overriding effect of the Unit Trust of India Act.

Analysis: Exemption under the Wealth-tax Act ordinarily depended on satisfaction of the conditions in section 5(3), including the requirement that the relevant assets be held for at least six months ending with the valuation date. However, section 32(1)(ba) of the Unit Trust of India Act contained a non obstante provision and expressly directed that wealth-tax shall not be payable on units up to the prescribed monetary limit. The value of the units in question was within that limit, and the later special provision was intended by Parliament to operate despite the contrary restriction in the Wealth-tax Act.

Conclusion: The assessee was entitled to exemption on the units notwithstanding the six-month requirement under the Wealth-tax Act.

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