Andhra Pradesh H.C : Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that an amount of Rs. 4 lakhs being the fair market value of the properties transferred by the assessee to his wife, is not includible in his wealth-tax under s. 4(1)(a) of the WT Act ?

Counsel Appeared

S.R. Ashok, for the Revenue : None, for the Assessee

JUDGMENT

S.V. MARUTHI, J. :

The assessee is an individual. The valuation date for the asst. yr. 1976-77 was 31st March, 1976. The assessee filed his return on 23rd June, 1976, declaring the net wealth as Rs. 42,090. In the earlier assessment years, the assessee paid a Mehr amount of Rs. 1,20,000 to his wife with which she purchased house properties in Kachiguda and Khairatabad. The value of those properties was estimated at Rs. four lakhs by the WTO and it was added to the assessee’s wealth under s. 4(1)(a) of the WT Act on the ground that Rs. 1,20,000 had not been transferred to the abovementioned wife of the assessee for adequate consideration or in connection with an agreement to live apart. The WTO computed the wealth at Rs. 4,37,643. On appeal, the order of assessment was set aside and the appellate authority directed the WTO to redo the assessment afresh as there is nothing on record to show that the assessee had not complied with the notices under s. 16(2) or (4) of the WT Act. The assessee being aggrieved preferred a second appeal to the Tribunal. The Tribunal relying on the wealth-tax assessment for the asst. 1975-76 in the case of the very assessee where it was held that the properties acquired by the assessee’s wife from out of Rs. 1,20,000 paid towards Mehr by the assessee cannot be included under s. 4(1)(a)(i) of the WT Act. Holding as above, the appeal was allowed. At the instance of the Revenue, the following questions were referred :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that an amount of Rs. 4 lakhs being the fair market value of the properties transferred by the assessee to his wife, is not includible in his wealth-tax under s. 4(1)(a) of the WT Act ?

2. If the answer to the above question is in the affirmative, whether the Tribunal is correct in law in omitting to sustain the inclusion of at least Rs. 1,20,000 in the net wealth of the assessee representing the debt due from his wife ?” Under Mohamedan law Mehr or dower is a sum of money or other property which the wife is entitled to receive from the husband in consideration of the marriage. Therefore, the payment of Rs. 1,20,000 is towards Mehr. Since, it is a consideration for the marriage, it can be paid at any time either at the time of marriage or after marriage. Under s. 4(1)(a) of the WT Act : In computing the net wealth (a) of an individual, there shall be included, as belonging to that individual, the value of assets which on the valuation date are held : (i) by the spouse of such individual to whom such assets have been transferred by the individual, directly or indirectly otherwise than for adequate consideration or in connection with an agreement to live apart.

4. A reading of s. 4(1)(a) makes it clear that only that asset which was transferred to his spouse in connection with an agreement or where the consideration for such transfer is inadequate. In this case Rs. 1,20,000 was transferred to the wife not in connection with the agreement but on account of an obligation, viz., payment of Mehr to the wife under the Muslim law as it is consideration for the marriage itself. Therefore, we are of the view that the amount of Rs. 1,20,000 cannot be included in the net wealth of the assessee under s. 4(1)(a) as it has no application.

In the light of the above, we answer the question referred to above in the affirmative and against the Revenue.

[Citation : 233 ITR 654]