Law:

Section:

Section 25(2), read with section 5(1)(vi), of the Wealth-tax Act, 1957 - Revision - Of orders prejudicial to interests of revenue - Whether 'decisions/orders of subordinate authorities which are erroneous' mean not only when erroneous in point of law but erroneous in any sense and if that error results in causing prejudice to interest of revenue, it is susceptible to be corrected by Commissioner in exercise of his jurisdiction under sub-section (2) of section 25 - Held, yes Section 5(1)(vi) of the Wealth-tax Act, 1957 - Exemption - Annuity Policies - Whether after amendment of section 2(e)(2)(ii) and clause (vi) of section 5(1) with effect from 1-4-1975 exemption in respect of annuities will be available only to extent explained in proviso to section 5(1)(vi) irrespective of date on which policies are taken or annuity contracts are entered into - Held, yes FACTS The assessee, an individual, submitted wealth-tax return disclosing negative wealth. He claimed exemption in respect of the value of annuity policies on the basis of the AAC's order relating to earlier assessment years in his own case. The simple claim of the assessee was that the said amounts were not includible in his net wealth. The WTO accepted the plea of the assessee. The Commissioner, in purported exercise of the power conferred upon him to revise orders of subordinate authorities, called for and examined the records of the assessee's case for the concerned assessment years and found that the WTO failed in including the value of the annuities in net wealth and, accordingly, committed error in determining the assessee's wealth resulting in computation of wealth as deficit. The Commissioner came to the conclusion that only the annuities which did not preclude computation thereof would be exempted to the extent specified in section 5(1)(vi), and, thus, took the view that the assessee would be entitled to exemption only qua 1/10th of the total value of the policies but not the total value of the policies as such. The Commissioner, accordingly, concluded that the WTO's orders were erroneous and prejudicial to the interest of the revenue and, accordingly, set aside the orders of assessment and directed…

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