V.K.SINGHAL, J. - (1.) THE Tribunal has referred the following question of law arising out of its order dt. 7th March, 1981, in respect of the asst. yrs. 1972 -73 to 1974 -75 under S. 27(1) of the WT Act, 1957 : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the finding of the AAC that the assessee was entitled to exemption of Rs. 1,50,000 under S. 5(3) of the WT Act, 1957 ?"
(2.) THE brief facts of the case are that the assessee made a gift of Rs. 3 lakhs to his minor son, Rajesh Kumar. The WTO included this amount in the assessment of the assessee but allowed the exemption to the extent of Rs. 1,50,000 in accordance with the provisions of S. 5(3) of the WT Act. Subsequently, the assessment order was reopened and it was held that the assessee is not entitled to the exemption in respect of the deposit held by the minor son because the provisions of S. 5(3) were amended w.e.f. 1st April, 1975, i.e., for the asst. year 1975 -76, when the words "held by him" were substituted by the words "owned by him". According to the WTO, these provisions were applicable from 1975 -76 and, therefore, the exemption of Rs. 1,50,000 was wrongly granted in the original assessment order. It is not in dispute that the assessee was holding the bank account in the name of his minor son for the entire amount of Rs. 3 lakhs. The submission of learned counsel for the Revenue is that since the assessee was not the owner of it, the exemption under S. 5(3) of the Act could not be given.
(3.) THE Orissa High Court in the case of Damji Jairam vs. CWT (1980) 126 ITR 245 (Ori) has held that the words "held by him" appearing in S. 5(3) extends to the assets held by the wife or the child which is to be included in the total wealth of the assessee by virtue of S. 4. The Madras High Court has also taken the same view in the case of Naganathan vs. CWT (1975) 101 ITR 287 (Mad). Sub -s. (3) of S. 4 was substituted by the Finance Act, 1975 (25 of 1975), w.e.f. 1st April, 1975, and after its amendment it was mentioned that where the value of any asset is to be included in the net wealth of the assessee in accordance with cl. (a) of sub -s. (1), there shall be deducted from such value any debts owing on the valuation date by the transferee mentioned in that clause in so far as such debts are referable to such assets and the provisions of S. 5 shall apply in relation to such assets as if such assets were assets belonging to the assessee. Sec. 4(3)(b) makes it clear that the provisions of S. 5 shall apply in relation to such assets as if such assets were "belonging to the assessee". The words "belonging to the assessee" creates a deeming fiction and, therefore, if the assets are to be included in the net wealth by a deeming fiction, then the exemption under S. 5 has to be allowed by the deeming fiction. As such the exemption to the extent of Rs. 1,50,000 has to be allowed to the assessee. In Nawab Sir Mir Osman Ali Khan vs. CWT (1986) 57 CTR (SC) 89 : (1986) 162 ITR 888 (SC) it was held by the apex Court that the liability to wealth -tax arises because of the belonging of the asset and not otherwise. Mere possession, or joint possession, unaccompanied by the right to be in possession or ownership of property, would, therefore, not bring the property within the definition of "net wealth" for it would not then be an asset "belonging" to the assessee. ;