1979 (1) TMI 17 - HC - Wealth-tax

Court Upholds Decision on Gift Transfer, Excludes from Wealth Calculation

The Court affirmed the Tribunal's decision that the gifts were made by the assessee himself. As the provision regarding assets transferred to son's wife ... Net Wealth, Wealth Tax Issues:1. Whether the Tribunal was justified in concluding that the gift was made by the assessee himselfRs.2. Whether the deletion of the gift amount of Rs. 50,000 for each of the two years was correctRs.Analysis:The judgment pertains to a reference made by the Income-tax Appellate Tribunal under the Wealth Tax Act regarding the assessment years 1962-63 and 1963-64. The assessee, an individual, had shares in a firm and accounts in the names of his wife and mother. After the mother's death, a sum was transferred to the wife's account, and gifts were made to grandsons, which were incorporated in a gift deed. The Wealth Tax Officer added these amounts to the assessee's net wealth for the respective years.The Appellate Assistant Commissioner (AAC) deleted the gift amounts following the Tribunal's decision that the assessee himself made the gifts through his wife. The Appellate Tribunal upheld this decision, stating that the assessee authorized his wife to make the gifts, making it equivalent to the assessee making the gifts. The Central Wealth Tax (CWT) sought a reference challenging this decision.In subsequent assessment years, the assessments were reopened under the Wealth Tax Act. The Tribunal held that the amounts, though in the wife's name, were assets of the assessee, and the gifts to grandsons were considered to be made by the assessee himself. The Tribunal referred to Section 4(1)(a)(v) of the Act, which includes assets transferred by the individual to the son's wife or minor child. However, this provision was not applicable to gifts made in 1958, as it came into effect later.The Court affirmed the Tribunal's decision, stating that the gifts were made by the assessee himself. As the provision regarding assets transferred to son's wife or minor child did not apply to the gifts in question, the amounts could not be added to the assessee's wealth. Consequently, the Court answered both questions in the affirmative, directing each party to bear their own costs.