# Gujarat H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not allowing the claim of further exemption under the provisions of the proviso to s. 5(1A) in spite of the fact that the proviso contemplates the raising of the overall limit of Rs. 1,50,000 of the assets u/s. 5(1A), when assets included the assets referred to in cl. (xv) or cl. (xvi) which have been owned prior to 1st March,1970 ?

## High Court Of Gujarat

### K.S. Digvijaysinhji vs. Commissioner Of Wealth Tax

#### 12th August, 1981

Counsel Appeared

J.P. Shah, for the Assessee : S.N. Shelat with R.P. Bhatt of R.P. Bhatt & Co., for the Revenue

This reference made at the instance of the assessee involves an interpretation of s. 5(1A) of the WT Act, 1957 (hereinafter referred to as “the Act”), in the light of the following facts. Assessment years under reference are the asst. yrs. 1971-72 and 1973-74. The assessee’s net wealth for these years included the assets which were exempt from payment of wealth-tax under cls. (xv), (xvi), (xxiii) and (xxv) of s. 5(1) of the Act. The value of the assets covered by cls. (xv) and (xvi) of s. 5(1) was Rs. 1,16,600, Rs. 1,27,338 and Rs. 1,28,548 for the asst. yrs. 1971-72, 1972-73 and 1973-74, respectively. These assets were owned by the assessee from a date prior to 1st March,1970. The assessee owned shares in Indian companies valued at Rs. 3,53,522 in the asst. yr. 1971-72 and Rs. 3,28,134 in the asst. yr. 1972-73. The assessee also owned units worth Rs. 5,000 in the Unit Trust of India in the asst. yrs. 1971-72 and 1972-73. The value of the shares held in the Indian companies and units in the Unit Trust of India for the assessment year 1973-74 is not available, but we are told that the value of Rs. 3,87,945 shown for “movables” in the assessment order for the asst. yr. 1973-74 includes the value of the above shares and units. The shares in the Indian companies are the assets covered by cl. (xxiii) and units in the Unit Trust of India are covered by cl. (xxv) of sub-s. (1) of s. 5. In other words, both these assets are exempt from payment of tax under s. 5(1). Sub-s. (1A) of s. 5, however, prescribes the limit of Rs. 1,50,000 for exemption in respect of the assets covered by the various clauses including cls. (xv), (xvi), (xxiii) and (xxv) of sub-s. (1) of s. 5. The proviso to s. 5(1A) lays down that if the value of the assets referred to in cls. (xv) and (xvi) of s. 5(1) which have been owned by the assessee continuously from a date prior to the 1st day of March, 1970, exceeds the limit of one hundred and fifty thousand rupees, the limit prescribed by sub-s. (1A) shall stand raised by the amount by which the value of these assets exceeds Rs. 1,50,000. The contention of the assessee, however, was that the assets covered by cls. (xv) and (xvi) of s. 5(1) were totally exempt from payment of wealth-tax and the limit of Rs. 1,50,000 prescribed by sub-s. (1A) of s. 5 applies to the assets covered by the other clauses specified in the said sub-section. The WTO accepted the contention of the assessee and did not include the value of the assets covered by cls, (xv) and (xvi) of s. 5(1) in the net wealth of the assessee for the assessment years under reference. He also deducted Rs. 1,50,000 out of the value of the shares and units in the Unit Trust of India in each of the years under reference.

The CWT on examining the records of the assessment proceedings for the assessment years under reference found that the WTO had committed an error in granting exemption in respect of the value of the assets covered by cls. (xv) and (xvi) of s. 5(1) in addition to the exemption to the extent of Rs. 1,50,000 in respect of assets other than those covered by cls. (xv) and (xvi). According to the CIT, sub-s. (1A) of s. 5 prescribes an overall limit of Rs. 1,50,000. This limit was raised only in cases where the value of the assets referred to in cls. (xv) and (xvi) of s. 5(1) exceeds Rs. 1,50,000. Since the value of the assets of the assessee covered by cls. (xv) and (xvi) of s. 5(1) did not exceed Rs. 1,50,000 the question of raising the limit under the proviso to sub-s. (1A) of s. 5 did not arise. The Commissioner, therefore, in exercise of his power under s. 25(2) of the Act, set aside the assessment order passed by the WTO and directed him to recompute the net wealth of the assessee in accordance with law in each of the assessment years under reference.

The Tribunal having confirmed the view taken by the CIT, at the instance of the assessee, the following questions have been referred to us for our opinion under s. 27(1) of the Act : ” 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not allowing the claim of further exemption under the provisions of the proviso to s. 5(1A) in spite of the fact that the proviso contemplates the raising of the overall limit of Rs. 1,50,000 of the assets u/s. 5(1A), when assets included the assets referred to in cl. (xv) or cl. (xvi) which have been owned prior to 1st March,1970 ? Whether the Tribunal was justified in not allowing the claim of raising the overall limit of Rs. 1,50,000 by the value of the assets falling in cl. (xv) and in cl. (xvi) which are owned prior to 1st March, 1970, by raising the limit of Rs. 1,50,000 under the provisions of the proviso even though the Tribunal having conceded that `the limit’ has reference to the aggregate limit referred to in the provisions of sec. 5(1A) of the WT Act ? Whether the interpretation of the Tribunal of para. 58 of the memo to the Finance Bill, 1970 is correct, in spite of the fact that the memo refers to the overall limit of Rs. 1,50,000, which limit is the limit of all assets contemplated in the provisions of s. 5(1A) and not merely the limit of the assets referred to in cls. (xv) and (xvi) ? Whether the Tribunal was justified in ignoring the rule that the object of the proviso to s. 5(1A), being in the nature of an incentive or concession, it should have been liberally construed ? Whether the Tribunal was justified in not considering the rule of construction that there is no surplusage or tautology in the enactment by the Legislature and each word has a meaning and when two interpretations are possible, the interpretation which is favourable to the subject should prevail ?”

The controversy in this reference is as regards the interpretation to be placed upon sub-s. (1A) of s. 5. Sub-s. (1A) of s. 5 read, as under : “(1A) Nothing contained in sub-s. (1) shall operate to exclude from the net wealth of the assessee any assets referred to in cls. (iva), (xv), (xvi), (xxii), (xxiii), (xxiv), (xxv), (xxvi), (xxvii), (xxviii), (xxix), (xxxi) and (xxxii) (not being deposits under the Post Office Savings Bank (Cumulative Time Deposits) Rules, (1959), to the extent the value thereof exceeds, in the aggregate, a sum of one hundred and fifty thousand rupees: Provided that where the assets include any assets referred to in cl. (xv) or cl. (xvi) (not being deposits under the Post Office Savings Bank (Cumulative Time Deposits) Rules, 1959), which have been owned by the assessee continuously from a date prior to the first day of March, 1970, and the value of the assets so included exceeds the limit of one hundred and fifty thousand rupees by any amount, such limit shall be raised by the said amount.”