TMI Blog1976 (8) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case, the Appellate Tribunal was right in law in holding that the value of the assessee's interest in the income from shares in Messrs. A. F. Harvey Ltd. should be excluded in computing the net wealth of Mrs. Harvey under section 6(i) of the Wealth-tax Act ?" We may point out immediately that the first question was referred to this court at the instance of the assessee, while the latter two questions were referred to this court at the instance of the department. The facts that gave rise to this reference many now be considered. One Mr. Andrew Harvey held 90,000 ordinary shares in a company incorporated in India called Messrs. A. F. Harvey Ltd. He died on March 28, 1957, domiciled in England. He had executed a will on November 30, 1956. That will was proved in England and probate was granted in England. Mr. Harvey had appointed five executors and trustees of his will and one of them was his wife, Mrs. Ethel Maud Devere Harvey. The administration of the estate devolved on and vested in the executors from the date of the testator's death, namely, March 28, 1957. The above-mentioned 90,000 shares of the deceased testator in the Indian company referred to above were tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stood possessed of the income of one-half of 90,000 shares, namely, 45,000 shares of the Indian company upon trust for Mrs. Harvey during her lifetime for her own use and benefit. This reference relates to the assessment to wealth-tax of the interest of Mrs. Harvey in the said 45,000 shares. For the assessment years 1957-58 to 1965-66 steps were taken by the Wealth-tax Officer to assess the interest of Mrs. Harvey in the said 45,000 shares. This he sought to achieve by two methods, namely, (1) direct assessment on Mrs. Harvey herself ; and (2) assessment on Messrs. A. F. Harvey Ltd., as agents of Mrs. Harvey. In respect of the value of the entire 90,000 shares there was an assessment on the executors, represented by Messrs A. F. Harvey Ltd., as agents. It may be pointed out that the assessment made on Messrs. A. F. Harvey Ltd., as agents of Mr. Harvey, was admittedly only a duplicate or protective assessment because the assessment was made in respect of the same wealth as an alternative to direct assessment made on Mrs. Harvey. The Wealth-tax Officer held that the interest which Mrs. Harvey had was an asset in India and could not be executed under section 6(i) of the Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequently, she could not be taxed in respect thereof. It also held that if she could not be taxed Messrs. A. F. Harvey Ltd. could not be taxed as the agents of Mrs. Harvey in respect of the same wealth and that, therefore, the appeals preferred by the department in respect of the assessments made in the name of Messrs. A. F. Harvey Ltd., as agents of Mrs. Harvey, were otiose and had to be dismissed as such. It is unnecessary for us to consider the question relating to the valuation because that was not referred to this court. With regard to the assessment made on the executors with Messrs. A. F. Harvey Ltd., as agents, the Tribunal held that the assessment was valid only in respect of the assessment year 1957-58 and was not valid with reference to the subsequent years. It is against the background to the above decision of the Tribunal that we have to consider the three questions referred to above. The first matter that requires to be considered is whether Mrs. Harvey was liable to be taxed under the provisions of the Act in respect of the interest which she got under the will of her husband, Mr. Harvey. The Tribunal has recorded the following common case of the parties : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , namely, the value of the assets and debts located outside India and, therefore, the same could not be brought to tax. Therefore, it is clear that the assessments made by the Wealth-tax Officer on Mrs. Harvey directly and on Messrs. A F. Harvey Ltd., as the agents of Mrs. Harvey, in respect of the same wealth were erroneous in law and, therefore, they were rightly set aside by the Appellate Assistant Commissioner as well as the Tribunal. Consequently, questions Nos. 2 and 3 extracted already have to be and are answered in the affirmative and against the department. That leaves out question No. 1. That question, as we have pointed out already, related to the assessment of the value of the entire 90,000 shares in the hands of the executors for the year 1957-58. We have already pointed out that the Appellate Assistant Commissioner held that under section 22 of the Act, the Indian company could be treated as the agents of the executors in England and that conclusion was confirmed by the Tribunal. However, the Appellate Assistant Commissioner held that even for the year 1957-58, the executors could not be assessed in respect of the said 90,000 shares. On the other hand, the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than, ........." Section 2(q) defines "valuation date" as follows : Valuation date in relation to any year for which an assessment is to be made under this Act means the last day of the previous year as defined in section 3 of the Income-tax Act, if an assessment were to be made under that Act for that year : ........" There is a proviso to this clause and it is unnecessary to refer to that proviso for the purpose of this case and it is enough to point out that it is the common case of the parties that the valuation date for the purpose of this case was 31st March of the particular year. Consequently, the effect of section 3 read with section 2(m) and section 2(q) is that the wealth-tax is chargeable on the aggregate value of all the assets of a person as on the valuation date. Even though section 3 starts by saying that there shall be charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e may be. From this point of view there can be no difference between the assessment year referable to the previous year in which he died or the succeeding years. For the purpose of the present case it is only necessary to refer to two other sections, namely, sections 19(1) and (2) and 19A. Section 19 has been in the statute from the very beginning and that states as follows : "19. (1) Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person, to the extent to which the estate is capable of meeting the charge, the wealth-tax assessed as payable by such person, or any sum, which would have been payable by him under this Act if he had not died. (2) Where a person dies without having furnished a return under the provisions of section 14 or after having furnished a return which the Wealth-tax Officer has reason to believe to be incorrect or incomplete, the Wealth-tax Officer may make an assessment of the net wealth of such person and determine the wealth-tax payable by the person on the basis of such assessment, and for this purpose may, by the issue of the appropriate notice which would have had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling a return or dies after the valuation date and after having filed a return which the Wealth-tax Officer considers to be incomplete or incorrect. Section 19A is entirely different and it was introduced by the Wealth-tax (Amendment) Act, 1964, and it came into force with effect from April 1, 1965. This section is as follows : "19A. (1) Subject as hereinafter provided, the net wealth of the estate of a deceased person shall be chargeable to tax in the hands of the executor or executors. (2) The executor or executors shall for the purposes of this Act be treated as an individual. (3) The status of the executor or executors shall for the purposes of this Act as regards residence and citizenship be the same as that of the deceased on the valuation date immediately preceding his death. (4) The assessment of an executor under this section shall be made separately from any assessment that may be made on him in respect of his own net wealth or on the net wealth of the deceased under section 19. (5) Separate assessments shall be made under this section in respect of the net wealth as on each valuation date as is included in the period from the date of the death of the decease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e valuation date. This conclusion, as we have pointed out already, we have reached simply as a matter of construction of the relevant statutory provisions. Now, against the background of this inference drawn by us from the statutory provisions, we shall consider the decision of the Bombay High Court in Jamnadas v. Commissioner of Wealth-tax [1965] 56 ITR 648 (Bom-Nag) referred to already. In that decision liability to assessment for the assessment year following the previous year during the course of which the assessee died was conceded. The judgment itself states : "The relevant facts are as follows : Smt. Sodradevi N. Daga died on October 5, 1959, prior thereto executing her last will dated April 8, 1959. The petitioners are the joint executors appointed under that will. The deceased left a large estate amounting to about Rs. 9 lakhs and odd. For the financial year expiring on 31st October, 1959, i. e., the assessment year 1960-61, the petitioners as executors were assessed to pay wealth-tax in respect of the estate left by the deceased and there is no dispute between the parties as regards that assessment." Consequently, in respect of the assessment for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents, reliance has been placed on the provisions of section 19 in support of their contention that this section entitles the revenue to charge wealth-tax even against executors, administrators or legal representatives of a deceased individual assessee." Thus, it will be clear that the above observation is fully in accordance with the view we have taken of the relevant provisions of the Act and that this decision does not lay down that wealth-tax can be claimed from the executors or administrators for the assessment year immediately preceding the previous year during the course of which the assessee died. However, there is one other statement in the course of the judgment which may lend support to such a view. The Bench of the Bombay High Court, after referring to section 19, proceeded to state [1965] 56 ITR 648, 653 (Bom-Nag.) : "The provisions in sub-section (2) when read with sub-section (1) (section 19) clearly indicate that the provisions in this section were to enable the revenue to recover wealth-tax in respect of the net wealth of the deceased person for the financial year in which the person died. Though such deceased person ceased to be the owner of all his propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be recovered in the hands of his legal representatives out of the assets left behind by the deceased. But, as far as the Act is concerned, it is not an assessment in respect of the wealth continuing over a period, but in respect of the wealth as available on a particular date, namely, the valuation date. Therefore, there cannot be any analogy, true or false, between the relevant provisions of the Income-tax Act and the Act in this behalf, in view of this basic and fundamental difference existing between the chargeable events themselves. Under these circumstances, we are of the opinion that since Mr. Harvey was dead in the present case on March 28, 1957, and was not alive on March 31, 1957, which was the valuation date, his assets could not be taxed in the hands of the executors for the assessment year 1957-58, because immediately on the death of Mr. Harvey the assets ceased to belong to him and they belonged to the legatees for whom he had made provisions under the will executed by him. An alternative contention was contemplated by the learned counsel for the department to the effect that on the death of Mr. Harvey on March 28, 1957, the estate vested in the executors, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to belong to the executors, and the expression 'belonging to' occurring in the definition of 'net wealth' in section 2(m) has to be construed in a general sense of holding or possessing and not in the strict sense of being owned." After referring to certain decisions construing the word "property" and the words "belonging to", this court concluded [1974] 96 ITR 152, 162 (Mad.) : "But, however wide the words 'belonging to' are construed, it is not possible for us to say that the properties in the hands of the executors for administration belong to them. Normally, when we speak of certain physical objects as belonging to a person without any qualifying expression, the primary natural meaning is that they are his own absolute property. When a person by virtue of a contractual obligation takes up the management of the properties as per the directions of a testator, he cannot be said to own the property absolutely." In view of this decision of this court, we have no hesitation in rejecting the contention advanced on behalf of the revenue in the present case. Mr. A. N. Rangaswami, learned counsel for the revenue, brought to our attention a decision of the Supreme Court in Raja ..... 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