1987 (10) TMI 27

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..... ction 5(1)(vi) would be effective for computing the net wealth with reference to the valuation date of March 31, 1975 ? The matter arises out of the wealth-tax assessment for the assessment year 1975-76 for which the valuation date is March 31, 1975. The point that came up for consideration before the Tribunal was whether the interest in life insurance annuities and life insurance policies could be included in the net wealth of the assessee for the assessment year 1975-76. The policies were for a term of less than ten years. Under section 5(1)(vi) of the Wealth-tax Act, exemption is available in respect of the right or interest of the assessee in any policy of insurance before the moneys covered by the policies become due and payable to t .....

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..... hnamoorthy, learned counsel for the assessee, had drawn our attention to the definition of " net wealth " under section 2(m) of the Wealth-tax Act and contended that when the charge under section 3 of the Act is on the net wealth on the corresponding valuation date and the liability becomes crystallised on that date, the state of affairs as on the valuation date alone could be reckoned and there is no scope for applying the proviso that came into force subsequent to the valuation date. The point stressed is that the limitation prescribed under the proviso with effect from April 1, 1975, can have no application in determining the net wealth as on March 31, 1975. Sri Menon, standing counsel for the Revenue, pointed out that in assessments, t .....

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..... ct, the Supreme Court held that in the case of wealth-tax, the rates are prescribed in the Schedules to the Act itself and the liability to pay wealth-tax becomes crystallised on the valuation date, though the tax is levied and becomes payable in the relevant assessment year and wealth-tax liability as on the valuation date was a " debt owed " within the meaning of section 2(m) of the Act. The question whether computation has to be made in accordance with law as on the first day of the assessment year did not arise for consideration in that case. Section 5 of the Act enumerates assets exempted and specifically provides that such items shall not be included in the net wealth of the assessee. The exemption has to be applied when the computat .....

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