TMI Blog1979 (3) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... to 1973-74. For these years, the WTO first calculated the value of the movable properties consisting mostly of shares in limited companies, deposits in bank and loan to a company. Thus, the movable properties were taken by the WTO as belonging to the body of individuals consisting of the assessee and his wife, Shrimati Neela V. Dempo. In working out the net wealth of the communion of the husband and the wife, the WTO gave a deduction of Rs. 1,50,000 on account of exemption under s. 5(1)(xxiii) read with s. 5(1A) of the said Act. After allowing this exemption and deducting the liabilities of the communion, he arrived at the net wealth of the communion and took fifty per cent. of the same as the net wealth of the assessee. Copies of the assessment orders of the WTO for each of these three years are annexed to the statement of the case as annexs. " A "," B " and " C ", respectively. These assessments were challenged in appeal by the assessee before the AAC, who, however, agreed with the computation made by the WTO and dismissed the appeals for all the three years. The assessee thereafter went up in further appeal to the Tribunal. A number of other points were also gone into by the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Act was allowable and not at the later stage of the individual assessment as claimed by the assessee. Accordingly, it was submitted by the learned counsel that the WTO was right in his computation and we were required to uphold the calculation of the net wealth made by the WTO in his assessment orders. On the other hand, the learned counsel for the assessee submitted that the communion between the husband and the wife constituted as result of the Portuguese Civil Code was not an association of persons known to either the I.T. Act or the W.T. Act. It was further submitted that even if the communion be considered to be an association of persons, this would not warrant the exemption or deduction under s. 5 being allowable at the stage of determination of the net wealth of the communion. In the submission of the learned counsel, the clear language employed by the Legislature showed that the exemption under s. 5 was to be considered at the stage of the assessment of the individual. Finally, reliance was placed on Instruction No. 897 contained in C.B.D.T. Bulletin. The said instruction was issued by the CBDT under Reference No. F. 320/157/75-WT dated 19th November, 1975. In our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted by the learned counsel for the Commissioner that in the I.T. Act, Parliament had, at the time of introduction of ss. 80C(g), 80CC and 80L(1)(c), recognised that the husband and wife, governed by the system of community of property in force in Goa, Daman and Diu, would constitute an association of persons. Now, when these three statutory provisions of the I.T. Act are properly scrutinised, it is found that far from supporting the submission of Mr. Joshi, the Legislature has given indication that the husband and the wife governed by the system of community of property in Goa would not be an association of persons but only a body of individuals for which special provision was required to be made in the three sections above noted. On this aspect of the matter, it may be apposite to refer to an earlier decision of this court in CIT v. Purushotam Gangadhar Bhende [1977] 106 ITR 932, where the provisions of the Portuguese Civil Code as well as art. 10 of the Commercial Code were considered. However, in that decision, the Division Bench, to which one of us, namely, myself, was a party, was not required to give its conclusion as to whether the husband and the wife who constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch can be ascertained on the termination of the communion by divorce, separation or death (articles 1921 to 1124, 1203, 1204, 1210, 1216, 1220 and 1226). What is most important in this connection is that it is an admitted position that on the death of one of the spouses, communion property does not devolve by survivorship, but the half share of the deceased spouse goes by succession to his or her own heirs or legatees by virtue of articles 1122 and 1123. There is a consistent reference to the half share of each of the consorts throughout the different articles dealing with various situations (vide articles 1112 to 1114 of the Portuguese Civil Code, and article. 10 of the Commercial Code dealing with the incidence of debts, and Portuguese Civil Code article 1118, dealing with the disposal of the movable property as well as articles 1120, 1123, 1220, 1463 and 1471). " In connection with this aspect of the matter the Tribunal has referred to three decisions of the Supreme Court, of which one was considered fully in Bhende's case [1977] 106 ITR 932 (Bom). The said decision is CIT v. Indira Balkrishna [1960] 39 ITR 546 (SC). The expression " association of persons " occurring in the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be regarded as the object or purpose of the marriage. Mr. Joshi rightly stressed that the definition of " association of persons " in which the aspect of earning profit or income was emphasized was under the I.T. Act and cannot be fully applied to the concept required to be considered under the W.T. Act. But by accepting his caveat it would not follow that the basic approach indicated in the judgments earlier referred to has to be totally abandoned. In order to constitute an association of persons, there must be, for the purpose of the W.T. Act, an association or coming together for the purpose of owning, holding or acquiring wealth. That is not the character of the communion formed as a result of the marriage under the Portuguese Civil Code. As earlier observed, even the Legislature seems to have accepted this position when it referred to this as a body of individuals rather than as an association of persons in the three sections under the I.T. Act earlier referred to. In our view, therefore, the Tribunal was entirely right in observing that no association of persons could have come into existence as a result of the marriage of the assessee with his wife. If that be so, then s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt that the deduction contemplated by s. 5(1)(iva) of the said Act is in the computation of the net wealth of an individual who is an assessee and not the firm of which he may be a partner. Observations in a similar vein are also to be discovered in a decision of the Orissa High Court in CWT v. I. Buchi Krishna [1979] 119 ITR 8 (Orissa). In the said decision it has been observed that a firm is not an assessable entity under the said Act as would appear from s. 3 thereof. In the view of the Orissa High Court, the stage at which exemption under s. 5(1) has to be given effect to is at the stage of computation of the net wealth of the assessee. The fallacy of the approach of the department has been pointed out by the Orissa High Court at p. 13 of the said judgment. We need not advert to the same here, as, in our opinion, the statutory provisions are clear and do not admit of any further or more elaborate discussion. Thus, in our view, the Tribunal's decision was totally justified inasmuch as the husband and the wife did not constitute an association of persons. Further, the exemption was allowable at the stage, of computing the net wealth of the assessee and not at the earlier stag ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
