TaxTMI 
TaxTMI 
1987 (4) TMI 15
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.... by the assessee to his wife on March 31, 1967, in computing his net wealth ? " The assessee, an individual, advanced certain amounts to his wife, from time to time, which she invested in constructing a house property. Finally, he made a gift of the aggregate amounts advanced to her, on March 31, 1967. By that date, the construction of the house property, in which the wife was investing the said amounts, was completed. For the assessment years 1973-74 to 1976-77, the Wealth-tax Officer included the market value of the house property in the wealth of the assessee. The value so included was Rs. 80,000 in the assessment year 1973-74, Rs. 85,000 in the assessment year 1974-75, Rs. 90,000 in the assessment year 1975-76 and Rs. 91,000 in the ass....
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....eof is either chargeable to gift-tax under the Gift-tax Act, 1958 (18 of 1958), or is not chargeable under section 5 of that Act, for any assessment year commencing after the 31 st day of March, 1964, but before the 1st day of April, 1972, the value of such assets or part thereof, as the case may be, shall not be included in computing the net wealth of the individual." A reading of the above provision shows that Parliament intended to include in the wealth of an individual, the value of assets transferred by him to his spouse, whether directly or indirectly, otherwise than for adequate consideration or in connection with an agreement to live apart. The proviso, however, engrafts an exception to the said principle. It says that where the tr....
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....ed that the value of the immovable properties gifted by the assessee to his wives prior to April 1, 1964, should be excluded from the computation of the wealth of the assessee. This was rejected by the Wealth-tax Officer on the ground that " the proviso would save only inclusion of such of the gifts as were made in the year relevant to the assessment year 1964-65 and the subsequent years and that the proviso did not apply to gifts made earlier to March 31, 1964." On the relevant date, the proviso read as follows: " Provided that where the transfer of such assets or any part thereof is either chargeable to gift-tax under the Gift-tax Act, 1958 (18 of 1958), or is not chargeable under section 5 of that Act, for any assessment year commencing....
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....clauses (i) to (iv). The taxing net is, therefore, spread so as to cover transfer of properties by individuals in respect of transfers referred to in clauses (i) to (iv)." The Bench then referred to the proviso, its Amendment by the Finance (No. 2) Act of 1971 and, observing that it is not happily worded, posed the question arising for consideration before them in the following words ; " The question here is whether the transferred asset under clauses (i) to (iv) of section 4(1)(a) can be included in the net wealth of the individual in view of the proviso. and then proceeded to give the answer in the following words : " The proviso was introduced to give wealth-tax exemption and that exemption is limited to the period referred to in the....
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....after the 31st day of March, 1964 " are referable to the assessment to be made under the Wealth-tax Act whereas the said words clearly refer to the chargeability or otherwise of the transfer to gift-tax under the Gift-tax Act. Similarly, the Bench opined that the value of the assets transferred prior to April 1, 1964, will not be included in the computation of the net wealth of the individual " till the assessment year 1964-65 ". The opinion so expressed is clearly not consistent with the language of the proviso. As explained by us hereinbefore, the proviso merely says that where the transfer of assets is either chargeable to gift-tax under the Gift-tax Act or is not chargeable under section 5 of the said Act, for the assessment years 1964-....
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.... M. G. Kollankulam v. CIT [1978] 115 ITR 160. The Madhya Pradesh High Court too has taken the same view in Smt. Malti Harshey v. CWT [1980] 121 ITR 676 (MP). The aforesaid decisions clearly support the construction placed before us upon the said proviso. In the ordinary course, we would have referred the matter to a Full Bench, since we are disagreeing with the Division Bench of our High Court. But, as pointed out by us hereinbefore, the observation made by the Bench, viz., that the benefit of exemption is available only for the assessment years beginning after 31st March, 1964, and ending before April 1, 1972, was not really called for or was necessary in that case. Moreover, in the facts of that case, it was not clear when the gifts were....