National Defence Gold Bonds retained wealth-tax exemption while held in bond form despite expiry of the original repayment date.

National Defence Gold Bonds remained exempt from inclusion in net wealth under section 5(1)(xvia) of the Wealth-tax Act so long as they were still held in bond form on the valuation date. The expiry of the original repayment date did not by itself withdraw the exemption, and the extended encashment period under the Gold Control framework meant the holder was not treated as owning taxable gold until encashment in the prescribed manner. Accordingly, the value of such bonds was not includible in net wealth while they continued to subsist as bonds.

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Issues: Whether National Defence Gold Bonds held on the valuation date continued to enjoy exemption from inclusion in net wealth under section 5(1)(xvia) of the Wealth-tax Act.

Analysis: The bonds were still held in bond form on the relevant valuation date, and the statutory exemption under section 5(1)(xvia) had not been withdrawn merely because the original repayment date had expired. The extension of the encashment period and the regulatory framework under the Gold Control Act showed that the bondholder was not automatically in possession of taxable gold on the valuation date. The asset remained National Defence Gold Bonds until encashment in accordance with the prescribed procedure.

Conclusion: The exemption under section 5(1)(xvia) was available, and the value of the gold bonds was not includible in the assessees' net wealth.

Ratio Decidendi: Where statutory exemption continues and the holding on the valuation date is of gold bonds rather than encashed gold, the value of such bonds cannot be brought to wealth-tax merely because the original repayment date has passed.

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