Law: Wealth Tax Act, 1957

Section: 4

Law: Wealth Tax Act, 1957

Section: 4

Section 4 of the Wealth-tax Act, 1957 - Net wealth to include certain assets - Assessment year 1957-58 - Karta of assessee-HUF made some investments in name of his wife and children - Neither amounts nor their titles were delivered to wife and children - There was also no evidence that wife and children accepted alleged gifts - Whether amount investments made was includible in assessment of assessee-HUF - Held, yes FACTS While completing the assessment of the assessee-HUF for the assessment year 1957-58, the WTO included certain amount being the investments standing in the names of the wife and children of karta. The WTO rejected the assessee's contention that section 4 was attracted only to cases of transfer after 1-4-1956, by an individual and not by a Hindu undivided family. On appeal, the AAC held that the transfers were not covered by section 4. However, on second appeal, the Tribunal agreed with the contention of the assessee in main and allowed the appeal. On reference: HELD In the instant case, all that was shown was that the karta had made some investments in the name of his wife, son and daughters. It was not shown that he had delivered the amounts in question to the alleged donees or that he had even delivered to them the relevant documents of title. There was also no evidence to show that the donees had accepted the alleged gifts. In these circumstances, it was difficult to hold that there were any gifts in favour of the wife, son and daughters of the assessee. There were also other grounds to hold that the investments in dispute could not be considered as gifts. The principles of law that the karta of a Hindu Mitakshara family has large powers over the disposal of the family movables was hardly applicable to cases like the one, on the facts and in the circumstances of the case, the Tribunal was not right to holding that the gifts made to son, wife and daughter were valid. Note : The case has been decided in favour of the revenue. CASES REFERRED TO Basaviah Gowder v. Commissioner of Gift-tax [1963] 49 ITR 817 (Mad.), CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589 (SC), Guramma v. Mallappa [1964] AIR 1964 SC 510, Palwanna Nadar v.…

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