Benami beneficial ownership upheld for movables recorded in taxpayer books; such movables remain includible despite reliance on statutory transfer exclusion.

Movable assets recorded in the assessee's money lending books without separate folio, credit or evidence of funding by the ostensible owner were held to be benami; the tribunal inferred beneficial ownership remained with the assessee and included those movables in his taxable wealth. Where no genuine transfer or change of beneficial ownership is proved before valuation, the statutory provision relied on to exclude assets does not operate to remove movables from the assessee's net wealth, so the movables remain includible.

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Issues: (i) Whether movable assets standing in the name of the assessee's wife are lawfully includible in the taxable wealth of the assessee; (ii) Whether section 4(4) of the Wealth-tax Act is applicable to movable properties standing in the name of the assessee's wife.

Issue (i): Whether movable assets in the name of the assessee's wife are includible in the assessee's taxable wealth.

Analysis: The movable items comprised advances, deposits and investments recorded in the assessee's money-lending books with no separate folio or credit in the wife's name; there was no evidence that the advances and investments originated from the wife's own funds; no transfer of funds from the assessee's folio to a folio of the wife was established; the assessee's claim that the investments were made to provide for the wife was not supported by contemporaneous transfers or by the will; the Tribunal drew an inference from these proved facts that the investments were benami and for the benefit of the assessee, and treated the wife as not the beneficial owner.

Conclusion: The movable assets standing in the name of the assessee's wife are includible in the taxable wealth of the assessee (in favour of Revenue).

Issue (ii): Whether section 4(4) of the Wealth-tax Act applies to the movable properties standing in the name of the assessee's wife.

Analysis: Section 4(4) was applied by the Tribunal to immovable property because transfers there were shown to have occurred prior to the relevant date; however, as to the movable properties the Tribunal found no transfer or change of beneficial ownership prior to the valuation date and instead found the investments to be benami; where there is no genuine transfer and the beneficial ownership remains with the assessee, section 4(4) does not operate to exclude those movables from the assessee's net wealth.

Conclusion: Section 4(4) of the Wealth-tax Act is not applicable to the movable properties on these facts; the movable properties are includible in the assessee's wealth (in favour of Revenue).

Final Conclusion: The reference is answered against the assessee; the Tribunal's finding that the movable investments were benami and hence includible in the assessee's taxable wealth is upheld, and the attempted reliance on section 4(4) fails in respect of the movable assets.

Ratio Decidendi: Where proved facts show investments recorded and treated in the books as belonging to the assessee with no separate credit or transfer to the ostensible owner, the tribunal may infer benami beneficial ownership and include such movables in the assessee's taxable wealth, and section 4(4) does not exclude movables that remain benami.

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