Wealth-tax exemptions denied for compulsory deposit rights and depreciable motor cars treated as taxable business assets.

Compulsory deposit rights under the Compulsory Deposit Scheme were treated as property in law because they conferred enforceable rights to interest and repayment by instalments; they were not an annuity within the Wealth-tax Act exclusion, and even if characterised as one, it was a purchased annuity outside the exemption. Motor cars used in professional activity and allowed depreciation were business assets, not articles intended for personal or household use, so the section 5(1)(viii) exemption was unavailable. The assessee therefore failed on both wealth-tax exemption claims, and the Revenue's position prevailed.

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Issues: (i) Whether compulsory deposits made under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974, or the statutory rights arising from them, were excluded from wealth as an annuity or otherwise outside the definition of "asset" under the Wealth-tax Act, 1957. (ii) Whether motor cars used for professional purposes and on which depreciation had been allowed were exempt as assets intended for personal or household use under section 5(1)(viii) of the Wealth-tax Act, 1957.

Issue (i): Whether compulsory deposits made under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974, or the statutory rights arising from them, were excluded from wealth as an annuity or otherwise outside the definition of "asset" under the Wealth-tax Act, 1957.

Analysis: On deposit under section 4(1) of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974, the assessee acquired enforceable rights to earn interest and to receive repayment in instalments. Those rights constituted property in law. The right so created did not satisfy the characteristics of an annuity, because the payments were tied to the amount deposited and represented repayment of capital in instalments with interest. Even if the right were treated as an annuity, it was one purchased by the assessee, and therefore did not fall within the exclusion in section 2(e)(2)(ii) of the Wealth-tax Act, 1957. The later insertion of section 7A in the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 did not alter that conclusion.

Conclusion: The compulsory deposit rights were taxable assets and not excluded annuities; the objection failed in favour of Revenue.

Issue (ii): Whether motor cars used for professional purposes and on which depreciation had been allowed were exempt as assets intended for personal or household use under section 5(1)(viii) of the Wealth-tax Act, 1957.

Analysis: The exemption for articles intended for personal or household use could not be extended to business assets merely because they were also used by the assessee. Allowing depreciation in income-tax proceedings showed that the cars were business assets, and a business asset giving rise to depreciation could not be treated as an article intended for personal or household use. The exemption provision could not be applied by splitting an asset into partial uses, and the Board's circular could not override the statutory language.

Conclusion: The motor cars were not exempt under section 5(1)(viii); the finding of exemption was set aside in favour of Revenue.

Final Conclusion: The assessee was not entitled to the claimed wealth-tax exemptions in respect of either the compulsory deposit amounts or the cars, and the Revenue succeeded on the substantive issues decided.

Ratio Decidendi: A statutory payment right created by compulsory deposit legislation is an asset unless it squarely answers the statutory notion of an annuity, and an article used as a depreciable business asset cannot be treated as intended for personal or household use for wealth-tax exemption purposes.

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