Share application money is not shares for wealth-tax exemption until allotment is actually made.

Share application money remitted for proposed allotment does not become "shares" until allotment is actually made, so it cannot qualify for exemption available to shares in an Indian company under the Wealth-tax Act. The character of the remittance must be tested on the valuation date, and a later allotment with regulatory approval does not change that character retrospectively. The claim for exemption was therefore not available and was rightly disallowed.

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Issues: Whether share application money remitted for allotment of shares could be treated as "shares" so as to qualify for exemption under section 5(1)(xxiii) of the Wealth-tax Act, 1957.

Analysis: The exemption under section 5(1)(xxiii) applies to shares in an Indian company. Share application money is only money paid towards a proposed allotment and does not become shares until allotment is made. The mere fact that the remittance was intended for share subscription, or that allotment occurred after the valuation date with regulatory approval, did not alter its character on the valuation date.

Conclusion: Share application money could not be equated with shares, and the assessee was not entitled to exemption under section 5(1)(xxiii). The claim was rightly disallowed.

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