Bharucha, J. - (1.) This is an appeal by special leave against the judgment of the High Court at Bombay on a reference under the provisions of S.27(1) of the Wealth-tax Act, 1957. The question arose in respect of the Assessment Year 1962-63, for which the relevant valuation date was 31st March, 1962 AND it reads thus :"Whether on the facts and in the circumstances of the same, the Tribunal was right in holding that under S.4(1)(a)(iii) of the Wealth-tax Act, 1957 it is the value of the assets which have been actually transferred by the assessee that should be included in the net wealth of the assessee, the transferor, although the form of assets transferred has undergone a change since the date of the transfer AND the value thereof on the valuation date is different -
(2.) The assessee, an individual, created two trusts, on 18th February, 1957 and 11th November, 1957, for the benefit of his two minor daughters. Thereby the respective amounts of Rs.25, 101/- and Rs.21,201/- were settled upon trust and transferred to the trustees. After the trusts had been created the trustees purchased shares out of the trust funds. On the valuation date the trust funds were held in shares, the valuation of which was Rs.75,610/-. In determining the wealth-tax payable by the assessee the Wealth-tax Officer took the view that it was the market value of the shares on the valuation date that was to be included in the wealth of the assessee. He rejected the contention that only the sum of Rest. 46,302/ - which was settled by the assessee upon trusts was to be taken into account in computing his wealth. The decision of the Wealth-tax Officer was confirmed in appeal. In a further appeal before the Income-tax Appellate Tribunal the assessees contention was upheld and, arising out of its judgment the question quoted above was referred to the High Court. The High Court, upon an interpretation of S. 4(1)(a)(iii) of the Wealth-tax Act, answered the question in the affirmative and in favour of the assessee. The Revenue is in appeal before us.
(3.) Section 4(1)(a)(iii) of the Wealth-tax Act reads thus : "4. (1) in computing the net wealth of an individual, there shall be included, as belonging to him- (a) the value of assets which on the valuation date are held- (iii) by a person or association of persons to whom such assets have been transferred by the individual otherwise than for adequate consideration for the benefit of the individual or his wife or minor child; Whether the assets referred to in any of the sub-clauses aforesaid are held in the form in which they were transferred or otherwise." ;