Inclusion of cross-gifts in donors' wealth upheld for 1978-79

The Tribunal partially allowed the appeals, upholding the inclusion of cross-gifts in the donors' wealth for the assessment year 1978-79 under section 4(1)(a)(iii) of the Wealth-tax Act. However, the Tribunal granted the assessee an opportunity to prove the status of minor children who became major during the relevant period, directing verification by the WTO to exclude assets held by such children.

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Issues:
Assessability of cross-gifts in the hands of donors for the assessment year 1978-79.

Detailed Analysis:

1. Background and Common Facts:
The judgment involves related appellants who made cross-gifts to each other's children. The gifts were made on 13-11-1974, and the question is whether these cross-gifts are assessable in the donors' hands for the assessment year 1978-79. The family tree and relationships are detailed for reference.

2. Previous Tribunal Opinion:
In a prior assessment year, the Tribunal opined that cross-gifts made before 1-4-1976 could not be included in the donors' total wealth. The Tribunal emphasized that the law did not cover cross-gifts before the amendment.

3. AAC's Opinion for the Assessment Year 1978-79:
The AAC held that the Tribunal's previous decision did not apply for the current assessment year due to an amendment in the law. She stated that cross-gifts would now fall under the purview of section 4(1)(a)(iii) of the Wealth-tax Act.

4. Assessee's Contentions:
The assessee argued that the amended provision would only apply to cross-gifts made after 1-4-1976. They contended that the gifts made before this date should not be included in their wealth.

5. Alternative Contention and AAC's Rejection:
The assessee also claimed that some minor children had become major, and gifts to them should not be considered. However, the AAC dismissed this argument due to lack of evidence regarding the minors' status.

6. Revenue's Response and Departmental Representative's Stand:
The revenue opposed the assessee's arguments, stating that the valuation date, not the gift date, was crucial for applying section 4(1)(a)(iii). They argued that the law did not specify a date for excluding indirect transfers.

7. Tribunal's Analysis and Decision:
The Tribunal analyzed the law and emphasized that the focus was on whether the assets existed on the valuation date, regardless of the transfer date. They compared this with sub-section (1A) of section 4, which had a specific date clause, highlighting the absence of such a provision in section 4(1)(a)(iii).

8. Decision on Minor Children's Status:
The Tribunal allowed the assessee to present evidence regarding minor children who may have become major during the relevant period. They directed the WTO to verify this information and exclude assets held by children who turned major on valuation dates.

9. Conclusion:
The Tribunal partially allowed the appeals for statistical purposes, upholding the AAC's decision on the inclusion of cross-gifts in the donors' wealth. However, they granted the assessee an opportunity to prove the status of minor children turned major, directing further verification by the WTO.

This detailed analysis covers the issues of assessability of cross-gifts in the donors' hands, the impact of law amendments, and the treatment of gifts to minors who became major during the assessment period.

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