1986 (7) TMI 191 - AT - Wealth-tax

Tribunal directs reevaluation of wealth excluding shares allotted to major sons on partition

Smt. Rampyaribai. Versus Wealth-Tax Officer.

Smt. Rampyaribai. Versus Wealth-Tax Officer. - ITD 019, 261, TTJ 027, 055, Issues:1. Whether the value of the entire house, including shares given to major sons, is to be assessed as 'converted property' under section 4(1A) of the Wealth-tax Act, 1957.Comprehensive Analysis:The judgment by the Appellate Tribunal ITAT Indore involved an appeal by the assessee against an order passed by the AAC concerning the assessment of the value of a house, including shares given to major sons, as 'converted property' under section 4(1A) of the Wealth-tax Act, 1957. The assessee had thrown the house into the common hotchpotch of the family by means of a declaration and subsequently partitioned it among family members. The issue at hand was whether the value of shares given to major sons on the partition should be included in the assessment of the assessee. The AAC had upheld the assessment of the entire house value in the hands of the appellant, leading to the appeal (para 1).Upon examination, the Tribunal found that while the value of shares belonging to the assessee and his wife had been correctly assessed under section 4(1A) in previous assessments, the inclusion of the entire house value in the current assessment lacked justification. The Tribunal noted that the property was a 'converted property' and that the provisions of section 4(1A) were indeed applicable. The key question was whether the shares allocated to major sons on partition should be considered in the assessment (para 2).The Tribunal analyzed the relevant clauses of the Act concerning converted property and its partition among family members. It emphasized that after partition, only the value of the converted property or part thereof received by the spouse or minor child of the individual should be assessed in the individual's hands. The Tribunal rejected the revenue's claim that the entire property value should always be assessed in the individual's hands, pointing out that such an interpretation would render certain clauses redundant. The Tribunal concluded that only the shares allotted to the assessee and his spouse, excluding those given to major sons, should be included in the assessment under section 4(1A) (para 3).Ultimately, the Tribunal allowed the appeal of the assessee, directing the WTO to recompute the wealth by adding only the value of shares allotted to the assessee and his spouse, while excluding the shares allotted to major sons on partition. The judgment clarified the distinction between assessing converted property shares allocated to spouses and minor children versus major children, aligning with the statutory provisions and general legal principles (para 4).