1983 (12) TMI 104 - AT - Wealth-tax

Appeal allowed for revenue in Wealth-tax Act proviso application for 1975-76 assessment

The appeal was allowed in favor of the revenue, affirming the application of the proviso under section 5(1)(vi) of the Wealth-tax Act, 1957, for the ... Assessment Year, Net Wealth, Previous Year, Valuation Date Issues:1. Inclusion of interest in life insurance annuities and policies in the net wealth of the assessee for a specific assessment year.2. Applicability of the proviso introduced under section 5(1)(vi) of the Wealth-tax Act, 1957.3. Interpretation of the law governing wealth-tax assessment based on the first day of the assessment year.4. Impact of amendments in the law on the assessment for a specific year.Detailed Analysis:1. The appeal before the Appellate Tribunal ITAT Cochin concerned the inclusion of interest in life insurance annuities and policies in the net wealth of the assessee for the assessment year 1975-76. The main issue was whether the proviso introduced under section 5(1)(vi) of the Wealth-tax Act, 1957, should be applied. This proviso exempted certain amounts from wealth tax based on the number of years the premium payment on the policy is payable. The WTO held that the proviso should be applied for that assessment year as it was introduced with effect from 1-4-1975.2. The assessee contended that the proviso introduced from 1-4-1975 should not be applied while computing the net wealth as of 31-3-1975. The Commissioner (Appeals) referred to a Supreme Court decision and held that the law to be applied is the one in force on the valuation date, not the first day of the assessment year. The Commissioner (Appeals) also addressed other contentions raised by the assessee regarding the implementation of the proviso and the treatment of annuities from an annuity policy. Ultimately, the Commissioner (Appeals) ruled in favor of the assessee and deleted the value of the annuities.3. The revenue argued that for taxing statutes, the law on the first day of the assessment year should govern the assessment. They cited various decisions to support this position and emphasized that the proviso introduced from 1-4-1975 should apply to the assessment for the year 1975-76. The revenue highlighted that the Supreme Court's decision in a previous case did not conflict with this principle.4. The assessee relied on a Supreme Court decision to argue that the liability to wealth tax crystallizes on the valuation date. They contended that the proviso in question was for the computation of net wealth and not for creating a charge. The assessee maintained that as per the law on the valuation date, the exemption for insurance policies should apply, and the proviso introduced later should not negate that right.5. The Tribunal analyzed the submissions and held that the assessment to wealth tax should be governed by the law on the first day of the assessment year. They referenced previous court decisions to support this principle, emphasizing that any amendments after the first day of the financial year should not apply to the assessment for that year. The Tribunal concluded that the proviso introduced from 1-4-1975 would determine the net wealth on the valuation date, even if it precedes the first day of the assessment year.6. Considering the Supreme Court's previous rulings on the liability to wealth tax and income tax, the Tribunal held that the law as of the first day of the assessment year should determine the assessment. They disagreed with the Commissioner (Appeals) and reinstated the order of the WTO regarding the application of the proviso to determine the net wealth for the assessment year in question.7. Consequently, the appeal was allowed in favor of the revenue, affirming the application of the proviso under section 5(1)(vi) of the Wealth-tax Act, 1957, for the assessment year 1975-76.