2004 (12) TMI 40

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....s of various companies worth Rs. 10,11,686?" The respondent-assessee claimed exemption under section 5(1)(xxa) of the Act in respect of shares worth Rs. 10,11,686 for the assessment year 1981-82. The corresponding valuation date is March 31,1981. According to the Wealth-tax Officer, the said exemption was not allowable because the shares in question were held by the assessee as a dealer. That business assets were to be valued under section 7(1) of the Act or under section 7(2)(a) of the Act after making adjustments under rules 2A to 2G of the Wealth-tax Rules, 1957. The Assessing Officer, further held that the shares in question were not directly purchased by the assessee from the company and do not pertain to initial issue of share capi....

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..... The Tribunal further took note of the fact that in the case of the assessee and her husband, no remedial action had been initiated by the Revenue, either under section 17 or under section 25(2) of the Act for disturbing the assessment orders whereunder similar claims were allowed in the hands of the assessee and her husband. The Tribunal held that the section does not prohibit grant of such exemption in respect of eligible shares owned by an assessee in the capacity of a dealer. That exemption was granted under the said provision in respect of initial issue of the shares issued by the specified companies engaged in activities in the priority sector as enumerated in the Ninth Schedule to the Income-tax Act in order to promote the growth of....

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....under sub-section (1) of section 5, it is necessary to take note of the definition of "assets" given in section 2(e) of the Act. The said definition clause states that "assets" includes property of every description, movable or immovable, but does not include the assets specified thereafter. Admittedly, for the year under consideration, stock-in-trade is not an asset excluded from the definition. Therefore, even if the assessee is a dealer in shares, as held by the Wealth-tax Officer, such shares are assets liable to charge under the Act. The charge of wealth-tax is levied as per the provisions of section 3 of the Act whereunder the tax in respect of the net wealth is levied at the rate or rates specified in the Schedule. The term "net weal....

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....hichever is the shorter period. In the present case, the Tribunal has found that the said condition, namely, holding/owning the shares for a period of six months is satisfied by the assessee. In relation to the reason assigned by the Assessing Officer regarding applicability of section 7 of the Act for the purposes of denying the relief of exemption, the Tribunal has rightly held that the said section is merely a machinery provision laying down as to how the value of the assets has to be determined and cannot govern section 5 of the Act which specifies the assets which are not to be included in the net wealth of an assessee on a given valuation date. In other words, the Tribunal is right in holding that the question of valuation of an as....