T.N.C. Rangarajan, Judicial Member - (1.) THESE appeals relate to the claim of the assessee for exemption under Section 5(1)(xviia) of the Wealth-tax Act, 1957 ('the Act')".
(2.) The assessees are inter-related HUFs having shares in certain coffee estates. The kartas of the assessees' families had made contributions to the public provident fund. It was claimed that such contributions were exempt from wealth-tax under Section 5(1)(xviia). While the WTO simply ignored the claim the AAC rejected the claim by pointing out that that section granted exemption only to credits of an individual and not to the credit of joint families. This decision is contested in these appeals. It is pointed out that under Section 5 the exemption is granted in respect of assets and the status of the assessee was irrelevant. In the alternative it was submitted that the word 'individual' must be understood to include also an HUF. On the other hand, the contention of the revenue was that the word 'individual' appearing in that section must be given significance and, hence, the exemption was available only in respect of the amounts standing to the credit of an individual and not to the credit of an HUF. On a consideration of the rival submissions we are of the opinion that the assessees are entitled to succeed. We may now set out the relevant provisions of the statute : 5. Exemption in respect of ertain assets.- (1) Subject to the provisions of Sub-section (1A) wealth-tax shall not be payable by an assessee in respect of the following assets and such assets shall not be included in the net wealth of the assessee- (i) to (xvii) ** ** ** (xviia) the amount standing to the credit of an individual in any provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette. It is seen that the section itself starts with the heading that it is a provision for exemption in respect of certain asset. Therefore, the status of the assessee is ordinarily of no relevance in deciding whether the asset is exempt from wealth-tax. Secondly, where there is a specific classification of the assessee to be eligible for the exemption it is specifically mentioned as in Clause (xxx) where the assessee has to be a member of the co-operative society before his deposit is exempt from tax, in Clause (xxxiv) where investment in shares is exempt in respect of not resident individuals only when they are citizens of India and in Clause (xvii) where the amounts at credit in employees' provident fund is exempt only if the assessee is a salaried employee. In contrast, in the present Clause (xviia) there are no words classifying the assessee for being eligible for the exemption. The words merely describe the amount which is eligible for exemption as the amount standing to the credit of an individual. In this context we have to appreciate that under the public Provident Funds Scheme, only an individual can subscribe and, therefore, there is no question of this Sub-section making distinction between the amount standing to the credit of an individual against the amount standing to the credit of any other person such as an HUF. Since the provident fund rules do not prohibit any fiduciary relationship between the contributor and the owner of the fund, we have to take that the amount to the credit of the individual in the provident fund is exempt even if he holds it on behalf of some one else. This view is further strengthened by the fact that the exemption is itself given only for the purposes of encouraging subscrip tion to the public provident fund, and, therefore, this entry cannot be narrowly construed to defect that purpose. In this view, it is unnecessary to consider whether individual in that entry would also include an HUF for which position also there is ample authority of the Supreme Court in the case of WTO v. C.K. Mammed Kayi [1981] 129 ITR 307 where it was held that the word 'individual' occurring in the Act does include a group of assessees. In the circumstances, we accept the claim of the assessee for exemption under Section 5(1)(xviia) and we direct the WTO to compute the net wealth after granting the deduction. The appeals are allowed. ;