High Court Of Gujarat
Commissioner Of Wealth Tax vs. Smt. Avaniben Ajaybhai
Section WT 5(1)(xxvi), Compulsory Deposit Scheme (IT Payers) Act, 1974, s. 7A
Asst. Years 1982-83, 1983-84
M.S. Shah & K.A. Puj, JJ.
WT Ref. No. 2 of 1989
27th June, 2002
Counsel Appeared
Tanvish U. Bhatt, for the Petitioner : None, for the Respondent
JUDGMENT
K.A. PUJ, J. :
The Revenue has come in reference to this Court raising the following question of law : “Whether, the amount paid as compulsory deposit under the Compulsory Deposit (IT Payers) Scheme, 1974, is to be treated as exempt from wealth-tax?”
2. In this case, the assessment years involved are asst. yrs. 1982-83 and 1983-84. The WTO in the course of the assessment proceedings rejected the assessee’s claim to exclude from the assessable wealth the amount paid as compulsory deposit under Compulsory Deposit (IT Payers) Scheme, 1974. He has also rejected the alternative contention raised by the assessee to have the said deposit valued on actuarial basis and the discounted value included in the net wealth of the assessee. The assessee preferred an appeal before the AAC who confirmed the view taken by the WTO. The matter was carried by the assessee to the Tribunal and the Tribunal accepted the arguments advanced by the assessee and directed the WTO to treat the compulsory deposit under the Compulsory Deposit (IT Payers) Scheme, 1974, as exempt. Since the main contention of the assessee was accepted, the Tribunal did not consider the alternative submission made by the assessee. On the aforesaid facts, the Tribunal has referred the above question for the opinion of this Court.
3. Heard Mr. Tanvish Bhatt, the learned standing counsel appearing for the Revenue. None appears on behalf of the respondent though the notice was served.
4. Mr. Tanvish Bhatt, the learned standing counsel has invited our attention to the decision of the Calcutta High Court in the case of Smt. Sunanda Devi Singhania vs. CWT (1993) 204 ITR 842 (Cal) : TC 64R.517 where a view was taken by the Calcutta High Court that the deposit under the Compulsory Deposit Scheme was clearly a deposit. There are substantial differences in the two schemes; namely, Annuity Deposit Scheme and Compulsory Deposit Scheme (IT Payers) Scheme. The difference is with regard to deposit, commutation and repayment of the deposit. The Tribunal was right in holding that the assessee was not entitled to deduction of the estimated amount of capital gains tax and that compulsory deposit should be taken into consideration for the purpose of computing the net wealth of the assessee for the asst. yrs. 1979-80 and 1980-81. However, in the said judgment itself a reference was made to the Finance Act, 1980. By virtue of this Act, s. 7A was inserted in the Compulsory Deposit Scheme (IT Payers) Act, 1974, w.e.f. 1st April, 1975, which provides that for the purposes of exemption under s. 5 of the WT Act, 1957, the amount of compulsory deposit shall be deemed to be a deposit with a banking company to which the Banking Regulation Act, 1949, applies. The introduction of s. 7A in the Compulsory Deposit Scheme (IT Payers) Act, 1974, granting exemption under s. 5 of the WT Act, 1957, to the compulsory deposits is another indication of the intention of the legislature to treat the deposits as assets and grant exemption because the deposits under the Compulsory Deposit Scheme would not otherwise be entitled to any exemption under the WT Act. Since a specific exemption was granted by virtue of the amendment made in the WT Act, the amount standing to the credit of the assessee as compulsory deposits would not be liable to wealth-tax. It appears that the Tribunal’s attention has not been drawn to this provision when the Tribunal has decided the matter following the decision of the Delhi Bench in the case of WTO vs. S.D. Nargolwala (1983) 5 ITD 690 (Del). In any case, the view taken by the Tribunal does not call for any interference by this Court for the reasons stated hereinabove. We, therefore, answer the question referred to us in the affirmative i.e., in favour of the assessee and against the Revenue.
5. The reference is disposed of accordingly with no order as to costs.
[Citation : 258 ITR 542]
