TMI Blog1975 (4) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 4(1)(a) which was introduced by the Wealth-tax (Amendment) Act, 1964, which came into force with effect from April 1, 1965, the value of the shares gifted to the two minor unmarried daughters are not liable to be included in the total wealth of the assessee. The Wealth-tax Officer, the Appellate Assistant Commissioner and the Tribunal held that the proviso would apply to only those gifts which are chargeable to gift-tax in any assessment year commencing after the 31st day of March, 1964, under the Gift-tax Act and those gifts which are not chargeable under section 5 of that Act and it will not apply to a case where the gift was made as in this case on 22nd July, 1960. At the instance of the assessee the following two questions have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommencing after the31st day of March, 1964, the value of such assets or part thereof, as the case may be, shall not be included in computing the net wealth of the individual." The argument of the learned counsel for the assessee is that the words "for any assessment year commencing after the 31st day of March, 1964 referred to the same assessment year which is contemplated under section 3 of the Wealth-tax Act and that therefore, irrespective of the date of gift for wealth-tax purposes for any assessment year commencing from 1st day of April, 1964, the assets transferred in favour of a minor child or unmarried minor daughter shall not be deemed to be held by the transferor-assessee. According to the learned counsel the fiction of treatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the value of the total assets gifted exceeded Rs. 1,45,000 was increased to 40% as and from the assessment year 1964-65. Further, in that assessment year by Finance Act, 1964, aggregation of the gifts made to the same donee during a certain period was also provided. The maximum rate of wealth-tax payable on wealth was about 2.5% at that relevant period. We, therefore, presume that Parliament might have intended that when the gift made suffers a tax to the extent of 40% under the Gift-tax Act, it might be exempted from wealth-tax. It is further to be noted that the property had already been transferred to the minor children and the transfer itself is not invalidated under section 4 of the Wealth-tax Act. Thus the transferor is a person w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act if it had been made to the same donee would be subject to aggregation and thereby the gift-tax may be attracted. Further, we only gave the probable reason for excluding the transactions falling within the assessment year commencing on 1st April, 1964, and the section itself does not in specific terms give any reason for such exemption. Learned counsel for the assessee also contended that the construction which we placed on the section might lead to some discrimination. He argued that an asset which was transferred by gift and not chargeable under section 5 of the Gift-tax Act prior to April 1, 1964, would be liable to be included in the net wealth of the transferor-assessee whereas if a similar transaction takes place after Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscriminatory. Repelling this contention the Supreme Court observed as follows : " The date, 1st April, 1962, which has been selected by the legislature for the purpose of clauses (f) and (g) of section 29 7(2) cannot be characterised as arbitrary or fanciful. It is the date on which the Act of 1961 actually came into force. For the application and the implementation of the Act of 1961, it was necessary to fix a date and the stage of the proceedings which were pending for providing by which enactment they would be governed. According to Hatisingh Mfg. Co. Ltd. v. Union of India, the State is undoubtedly prohibited from denying to any person equality before the law or the equal protection of the laws but by enacting a law which applies ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for any assessment year commencing after the 31st day of March, 1964 " in that provision refers to the assessment year under the Gif t-tax Act, the Estate Duty Act itself not contemplating any assessment year as such. The result of the foregoing discussion is that the words, " for any assessment year commencing after the 31st day of March, 1964 " qualify the gift made and chargeable or not chargeable with reference to that assessment year under the Gift-tax Act and not to any assessment year under the Wealth-tax Act. If that is so, only gifts made in the relevant assessment year commencing after the 31st March, 1964, or subsequent assessment years will be excluded from the net wealth of the individual. Accordingly, we answer the questions r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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