Law: Wealth Tax Act, 1957

Section: 27(1),4(1)(a)(iv),2(xii)

Wealth tax--- ---- Hindu undivided family---Gift of cash made by Karta from family funds---Not objected to by coparceners---Gift-tax levied---Sum gifted cannot, thereafter, be treated as belonging to H.U.F. for wealth tax purposes--­Indian Wealth Tax Act, 1957. The assessee was a Hindu undivided family. The Karta of this family made a cash gift of Rs.10,50,000 to one M. Gift-tax was levied on this sum, and no other coparcener of the Hindu undivided family objected to the gift or the levy of gift tax. In wealth tax proceedings, however, the Assessing Officer held that the Karta of the family had no legal right to make the gift and as such the gift made by him was void and that the gifted amount continued to remain the property of the assessee. He, therefore, included the said amount in the net wealth of the assessee. This was confirmed by the Tribunal. On a reference: Held, that if the amount in question was includible as an asset for purposes of wealth tax, then the levy of gift tax was impermissible. Conversely, when gift tax is levied, then it would be grotesque to impose liability of wealth tax too. Therefore, the Tribunal was not right in vacating the order of the First Appellate Authority and in holding that the gifted amount, subjected to gift tax and consented to, by the other coparceners, continued to belong to the Hindu undivided family for wealth tax purposes. C.I.T. v. Motilal Ramswaroop (1970) 76 ITR 43 (Raj.); Parashuram Pottery Works Co. Ltd. v. I.T.O. (1977) 106 ITR 1 (SC) and Sunil Kumar v. Ram Parkash AIR 1988 SC 576 ref. JUDGMENT A. R. TIWARI, J.---At the instance of the assessee, the Tribunal has stated the case and referred the under noted common question of law in both these cases on applications registered as R.As . Nos.63, 64, 65 and 66/Ind of 1995 arising out of the orders passed on February 28, 1995, in I.T.As. Nos. 33, 63, 64 and 65/Ind of 1992 for the assessment years 1987-88 to 1990-91 and R.A. Nos.67, 68, 69 and 70/Ind of 1995 arising out of the orders passed on February 28, 1995, in W.T.As. Nos.31, 60, 61 and 62/Ind of 1992 for the assessment years 1987-88 to 1990-91 for consideration: "Whether on the facts and in the circumstances…

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