1986 (3) TMI 102 - AT - Wealth-tax

Summary

Issues: Claim of exemption under section 5(1)(xviia) of the Wealth-tax Act, 1957 for contributions made to a public provident fund by inter-related Hindu Undivided Families (HUFs).

Analysis:
The appeals revolve around the contention of the assessee for exemption under section 5(1)(xviia) of the Wealth-tax Act, 1957. The assessees, who are inter-related HUFs with shares in certain coffee estates, had made contributions to a public provident fund. The WTO ignored the claim, while the AAC rejected it on the basis that the exemption only applied to credits of an individual and not to joint families. The central issue was whether the word 'individual' in the statute included HUFs. The revenue argued that the exemption was only available for amounts credited to an individual, not an HUF. On the other hand, the assessees contended that the status of the assessee was irrelevant, and the word 'individual' should be interpreted broadly to include HUFs.

Upon considering the rival submissions, the Tribunal held that the assessees were entitled to succeed in their claim for exemption under section 5(1)(xviia). The Tribunal analyzed the relevant provisions of the statute, emphasizing that the section provided for exemption in respect of certain assets, making the status of the assessee ordinarily irrelevant. Unlike other clauses that specifically classified the assessee for exemption, clause (xviia) did not contain such classification. The Tribunal noted that under the public Provident Funds Scheme, only individuals could subscribe, indicating that the exemption applied to amounts standing to the credit of an individual, regardless of any fiduciary relationship. The purpose of the exemption was to encourage subscriptions to the public provident fund, supporting a broad interpretation of the term 'individual.' The Tribunal also referenced previous authority indicating that the term 'individual' could include a group of assessees, such as an HUF. Consequently, the Tribunal accepted the claim for exemption and directed the WTO to compute the net wealth after granting the deduction, ultimately allowing the appeals.