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TMI Blog1969 (12) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,000 to his four sons on January 4, 1963. Under section 3(1) of the Income-tax Act, the previous year in the case of the petitioner was determined as October 1, 1962, to September 30, 1963. According to the rates specified in the Schedule to the Gift-tax Act, which was in force on January 4, 1963, the gift-tax that was payable in respect of the above gift worked out to Rs. 5,400. The Finance Act of 1964 which came into force with effect from April 1, 1964, varied the rates of gift-tax by amending the Schedule. In accordance with the rates specified in the Schedule and which came info force with effect from April 1, 1964, the gift-tax that was payable in respect of the above gift worked out to Rs. 21,400. The Gift-tax Officer accordingly c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alth-tax Act and submitted that, under the Wealth-tax Act, the courts have held that the liability to pay wealth-tax crystallised on the valuation date and not on the first day of the assessment year. On that analogy, in the gift-tax matters, it was submitted that the gift-tax liability crystallised on the date of gift and not on the commencing date of the assessment year following the previous year. In support of that argument, the learned counsel relied upon the decisions in Commissioner of Wealth-tax v. Muthukrishna Ammal , and H. H. Setu Parvati Bayi v. Commissioner of Wealth-tax . As against this argument, the learned counsel, Sri Ananta Babu, appearing for the Gift-tax Officer, contended that, under the charging section, i.e., secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1963, which date fall in the previous year from October 1, 1962, to September 30, 1963, relevant to the assessment year 1964-65. On a plain reading of the charging section, it is clear that the gifts made in the previous year are chargeable to tax at the rates specified in the Schedule in force at the commencement of the relevant assessment year. In Commissioner of Income-tax v. Isthmian Steamship Lines , the assessee claimed for the assessment years 1941-42, 1942-43 and 1943-44 that its unabsorbed depreciation at the end of 1938-39 should be deemed to be a part of the depreciation allowance for 1939-40 and should be allowed to be further carried forward under section 10(2)(vi) of the Indian Income-tax Act, 1922. The Supreme Court upholding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no point of time earlier than that. The fact that net wealth is computed with reference to a date anterior to the commencement of the financial year for which wealth-tax is levied does not mean that the liability to wealth-tax arises at such earlier date. The rate of tax applicable is that which is in existence at the time of levy of tax. If the law changes during the interval between the valuation date and the date when the tax is actually attracted, tax will be levied in accordance with the provisions as they stand at the time of attraction of tax and not as it was on the valuation date. " We will then briefly refer to the rulings relied upon by the assessee's counsel. In H. H. Setu Parvati Bayi v. Commissioner of Wealth-tax, their Lord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h-tax for the appropriate assessment year. In view of these rulings the learned counsel contended that, as in the Wealth-tax Act, the liability to pay gift-tax crystallised on the date of the gift ; therefore, the rates of tax which were specified in the Schedule, which was in force on the date of the gift, were applicable. The above said two rulings relied upon by the learned counsel do not relate to the computation of tax. Under the Wealth-tax Act, although the net wealth is to be determined on the valuation date, still the computation of tax is made according to rates that are in force on the commencing date of the assessment year following the previous year. In the former decision relied upon by the assessee's counsel their Lordships ..... X X X X Extracts X X X X X X X X Extracts X X X X
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