Law:

Section:

Section 4 of the Wealth-tax Act, 1957 - Deemed wealth - Whether amount gifted by assessee to his wife in 1958 could be included in total assets of assessee for computation of his net wealth - Held, yes FACTS The assessee made a gift of rupees one-lakh in favour of his wife in 1958. The WTO included this amount in the total wealth of the assessee under section 4(1). Before the AAC assessee contended that in proviso to section 4, the words 'for any assessment year commencing after 31-3-1964' refer to the assessment year under the Act and not to the assessment year under the Gift-tax Act, 1958 the reason being that there is a comma after the words 'under section 5 of the Act' (Gift-tax Act). If these words were meant to refer to the 1958 Act, this (comma) should not have been there. Even if the other interpretation that these words refer to the 1958 Act be possible (which is not so) then even in the case of two possible interpretations, the interpretations favourable to the appellant should be adopted, because unless the words are capable only of one interpretation and in favour of the revenue, no tax can be levied. The AAC accepted the contention of the assessee and allowed the appeal. The Tribunal upheld the order of the AAC. On reference: HELD Section 4 of the Act lays down that where the transfer of assets is exigible to gift-tax those assets as well as the assets which fall within the purview of section 5 of the 1958 Act, which relates to certain exemptions, shall not be included in the net wealth of the individual under section 4 of the Act if he happens to donate these assets, on any day after 31-3-1964 up to 1-4-1972. It appears that during this period gift-tax was imposed at a much higher rate and Parliament thought that the property gifted during this period should not be further subjected to taxation under the Act. The punctuation has never been regarded as a safe guide in the interpretation of a legislative enactment. The appearance of the comma after the words, "under section 5 of the Gift-tax Act", does not alter the true meaning of the section. The words "is not chargeable under section 5 of that Act" show that the amount upon which gift-tax is…

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