1981 (12) TMI 83 - AT - Wealth-tax

Summary

Issues:
Interpretation of section 4(1)(a)(v) of the Wealth-tax Act, 1957 regarding a gift of jewellery made by the assessee to her daughter-in-law before the completion of the marriage ceremony.

Analysis:
In this appeal, the main issue revolves around the interpretation of section 4(1)(a)(v) of the Wealth-tax Act, 1957. The assessee claimed to have gifted jewellery to her daughter-in-law before the completion of the marriage ceremony, arguing that the daughter-in-law was not considered as such at the time of the gift. The WTO and AAC held that the daughter-in-law had become the wife of the assessee's son at the time of the gift, thus attracting the provisions of section 4(1)(a)(v) and taxing the gifted amount. The contention was that the gift was made before the Saptapadi, a crucial ritual in Hindu marriages, took place.

The counsel for the assessee referred to section 7(2) of the Hindu Marriage Act, 1955, stating that a marriage is complete only after the Saptapadi ritual. The Tribunal agreed that a binding marriage under Hindu Law is not established until the completion of the Saptapadi ritual. It was established that the jewellery was gifted before the commencement of Saptapadi, which signifies the completion of the marriage. The departmental representative argued that as per section 4(1)(a)(v), it is sufficient for the son's wife to hold the asset on the valuation date, regardless of the timing of the gift. However, the Tribunal disagreed, emphasizing that the donee should be the son's wife not only on the valuation date but also at the time of the gift.

The Tribunal relied on a Supreme Court decision regarding a similar provision in the Indian Income-tax Act, 1922, which stated that the relationship of husband and wife must exist not only at the time of income accrual but also at the time of the asset transfer. Applying this principle, the Tribunal concluded that section 4(1)(a)(v) does not apply in this case as the daughter-in-law was not the wife of the assessee's son when the gift was made. Consequently, the Tribunal allowed the appeal, ruling that the impugned value of jewellery cannot be taxed based on the deeming provision of section 4(1)(a)(v) in the hands of the assessee.