2006 (9) TMI 162

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....held by the assessee were exempt from being assessed under the Wealth tax Act till these were not redeemed though the date of redemption was over? 2.Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount of deposit under the CDS was exempt under the Wealth-tax Act?" 2. The assessee had certain National Defence Gold Bonds which were to be redeemed on 27.10.1990. The WTO valued gold receivable under the said bonds at Rs.3,36,090/-, rejecting the contention of the assessee that the bonds were exempt from being assessed under the Wealth Tax Act till they are redeemed. The WTO also included deposit of Rs.66,670/- in CDS. 3. The Tribunal upheld the plea of the assessee and hel....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... hands of the assessee were exempt till redeemed though the date of redemption might be over. If the assessee did not choose to redeem, he is entitled to claim exemption. It has further been argued by the ld. counsel that the CIT(A) has only remanded the case to the WTO on this question for reappraisal in the light of earlier decision. We, therefore, do not find any fault with the order of the CIT(A) and ground No.2 also fails." 4. We find that the first question is covered by judgment of Gujarat High Court in Shankerlal Gafurbhai Patel v. Commissioner of Income Tax, (2004) 269 ITR 508. In the said judgment, it was noticed that gold bonds were granted exemption under Section 5(1) (xvia) of the Wealth Tax Act, 1957 (for short, 'the Act') ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e. 6. We find that the second question is covered by judgment of the Calcutta High Court in Smt.Sunanda Devi Singhania v. Commissioner of Wealth Tax, (1993) 204 ITR 842, wherein the question was answered in favour of the revenue and against the assessee. Considering the question, it was observed (page 847,853) :- "The object of the Compulsory Deposit Scheme (Income tax Payers) Act, 1974, was to augment the resources for economic development of the country and with that object in view, it required certain categories of income tax payers to deposit a portion of their income in accordance with the scheme. It is the income of the depositor which is refunded by instalments. An annuity means where an income is purchased with a sum of money ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

...., the value of the assessee's right to receive any annuity purchased by him or purchased by another person in pursuance of a contract with the assessee is to be regarded, for and from the assessment year 1975-76, as his asset for the purpose of the levy of wealth-tax, irrespective of whether such annuity is commutable or not." "In the light of the aforesaid decisions, we have to consider whether the deposit under the Compulsory Deposit Scheme is an annuity, not purchased by the assessee and is, therefore, exempt. It is not disputed that unless exemption can be claimed as an annuity under section 2(e)(2)(ii), it would clearly be includible in the net wealth of the assessee for the simple reason that it is a deposit in the name of the asse....