Decided on October 29,1968



Narayana Pillai, J. - (1.) THIS is a reference under Section 27(3) of the Wealth-tax Act, 1957, hereinafter referred to as the Act, arising out of the wealth-tax assessment of the assessee for the assessment year 1962-63 for which the corresponding valuation date is August 16, 1961.
(2.) THE dispute involved in the reference relates to whether an amount of Rs. 19,438 being the value of a property standing in the name of the assessee's wife is includible in the net wealth of the assessee. The facts can be summarised in this way : The property was purchased by the assessee's wife on June 12, 1951, for Rs. 17,750. It was the assessee who paid the whole consideration for the sale. He included the value of the property in his previous wealth-tax returns and the income from the property in income-tax returns. In his return for the relevant assessment year he showed the value of the property as Rs. 19,438 but claimed exemption under Section 4(4) of the Act. According to him it was on account of a mistake that he happened to include the value of the property and the income from it in his previous returns. The Wealth-tax Officer rejected the assessee's claim. That decision was upheld by the Appellate Assistant Commissioner of Wealth-tax in the appeal filed before him by the assessee. In his order the Appellate Assistant Commissioner found that the sale deed for the property was one taken by the assessee in his wife's name benami for himself. From that order the assessee unsuccessfully appealed to the Appellate Tribunal. It was thereafter that this reference has been made.
(3.) THE assessee in including the value of the property in his return for the relevant assessment year proceeded upon the assumption that the property was one transferred by him in the name of his wife and so it came within Section 4(1)(a)(i) of the Act but he was entitled to exemption as it fell within Section 4(4) of the Act. THE revenue took the stand that the assessee's wife was only a benamidar for the assessee. THE Appellate Tribunal and the subordinate authorities disallowed the exemption claimed by the assessee on the ground that the assessee was the real owner of the property. Under Section 3, the charging section in the Act : "Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the first day of April, 1957, a tax (hereinafter referred to as wealth-tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule." Section 4 of the Act, so far as is for the moment relevant, reads: "4. (1) In computing the net wealth of an individual, there shall be included, as belonging to that individual-- (a) the value of assets which on the valuation date are held-- (i) by the spouse of such individual to whom such assets have been transferred by the individual, directly or indirectly, otherwise than for adequate consideration or in connection with an agreement to live apart, ......... (4) Nothing contained in Clause (a) of Sub-section (1) shall apply to any such transfer as is referred to therein made by an individual before the 1st day of April, 1956, and the value of any assets so transferred shall not be included in the computation of his net wealth." ;

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