Deeming provision for gifts to a son's wife applies only if the relationship exists when the transfer takes effect.

The deeming provision in section 4(1)(a)(v) of the Wealth-tax Act, 1957 applies only if the specified relationship exists when the gift takes effect, not merely on the valuation date. Since the donee became the assessee's son's wife only after the gift had been made, the statutory condition for clubbing the gifted asset was not satisfied. The gifted property therefore could not be included in the assessee's net wealth under the deeming provision.

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Issues: Whether the deeming provision in section 4(1)(a)(v) of the Wealth-tax Act, 1957 applied where the donee was not the son's wife on the date of the gift but became so later.

Analysis: The provision was construed to require that the relationship of son's wife must exist not only on the valuation date but also at the time when the gift is made. The Court followed the reasoning applied to the pari materia income-tax provision, under which the relevant relationship must subsist when the transfer takes effect. Since the gift had taken effect before the donee became the assessee's son's wife, the statutory condition for clubbing the gifted asset was not satisfied.

Conclusion: Section 4(1)(a)(v) of the Wealth-tax Act, 1957 was held not to be attracted, and the addition of the gifted asset to the assessee's net wealth was unsustainable.

Final Conclusion: The reference was answered in favour of the assessee and against the Department, affirming that the gifted property could not be brought to tax under the deeming provision on the facts found.

Ratio Decidendi: A deeming provision that depends on a specified relationship applies only if that relationship exists when the transfer or gift takes effect, and not merely on the later valuation date.

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