In pari materia construction barred inclusion of trust property in net wealth under the Wealth-tax Act.

Section 4(1)(a)(iii) of the Wealth-tax Act, 1957 was treated as materially similar to section 16(3)(b) of the Indian Income-tax Act, 1922, so the earlier construction of the income-tax provision governed the wealth-tax provision. On that reasoning, the Calcutta HC held that transfers made under a trust deed did not attract the wealth-tax provision on the facts presented, and the value of the settled properties could not be included in the assessee's net wealth. The reference was accordingly answered in favour of the assessee, and the remaining referred questions were left unanswered after the main issue was resolved.

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Issues: Whether section 4(1)(a)(iii) of the Wealth-tax Act, 1957 applied to transfers made by trust deed so as to include the value of the transferred properties in the assessee's net wealth.

Analysis: The provision in question was treated as materially similar to section 16(3)(b) of the Indian Income-tax Act, 1922. Following the earlier decision construing the income-tax provision, the Court held that the wealth-tax provision was not attracted to the trust transfers in the facts of the case. On that basis, the value of the properties settled in trust could not be brought to tax in the assessee's hands. The remaining referred questions were not answered once the main issue was resolved.

Conclusion: Section 4(1)(a)(iii) of the Wealth-tax Act, 1957 was held inapplicable to the trust transfers, and the reference was answered in favour of the assessee.

Ratio Decidendi: Where a wealth-tax provision is in pari materia with an earlier income-tax provision already construed by the Court, the same construction governs the wealth-tax provision and prevents inclusion of the trust property in the assessee's net wealth if the earlier provision was held inapplicable.

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