1. These bunch of appeals, five by the assessee, Dr. (Mrs.) G. Isaac, relating to her wealth-tax assessment for the years 1974-75 to 1978-79, and three by the department, pertaining to her wealth-tax assessment for the years 1974-75, 1977-78 and 1978-79, are conveniently disposed of by this consolidated order.
2. Taking up the assessee's appeal for the year 1974-75, there are two grounds of objection. The first objection is against the rejection of the assessee's claim for exemption under Section 6(ii) of the Wealth-tax Act, 1957 ("the Act"), on an amount of Rs. 19,68,810 which stood deposited in her account, originally styled "Non-resident (External) Account", under the Foreign Exchange Regulation Act, 1947 ("FERA"). The second ground of objection involves the assessee's claim for deduction of income-tax and wealth-tax liability for the assessment year 1974-75 as determined in the assessment.
3. The relevant facts for consideration of the assessee's first objection may be stated. The assessee is a citizen of India. She went to Dubai in the year 1959 and it is stated that out of her earnings abroad, she had remitted moneys which were held in her account with the British Bank of Middle-East, Bombay, by way of deposits, the accounts having been styled "Non-resident (External) Account", in accordance with FERA and under its rules. She returned to India on 20-10-1973 and, before her return, she had caused a house property to be purchased in Kodaikanal, styled Maurice Hill, on 17-3-1973 for her occupation when she returned to India. It appears that the property, after the purchase and before she had occupied it on her arrival, was let out for some period about which there appears to be some dispute between the department and the assessee. But it is clear, from the evidence led by the assessee and the finding of the AAC, with which we agree, that the property was in fact let out to some persons, may be seasonally, after its purchase and before her occupation.
4. In the original wealth-tax return for the assessment year 1974-75, filed on 29-6-1976, the assessee stated her status as resident, but not ordinarily resident. She, however, filed a revised return claiming the status as nonresident. It further appears, that in the income-tax return for the assessment year, she had stated her status as "resident, but not ordinarily resident" and the assessment was made on that basis.
Also, in the said income-tax return, she had shown the interest receipt on her deposits standing in her Non-resident (External) Account as liable to tax. Later, however, it appears that she had filed a revision petition, before the Commissioner, claiming exemption in regard to such interest as exempt by virtue of Section 10(4A) of the Income-tax Act, 1961.
5. Now, the WTO has rejected the assessee's claim for exemption under Section 6(ii) of the Act with regard to deposits in her Non-resident (External) Account on the grounds that in the income-tax assessments her status has been taken as resident, but not ordinarily resident, in the wealth-tax assessment she herself, originally, had returned her status as resident, but not ordinarily resident and she purchased a house on 17-3-1973 for her occupation and, even if her letting out of the house is accepted, it was only of a seasonal character and not a permanent one, and, therefore, she has maintained or caused to be maintained for her a dwelling place in India for a period amounting to 182 days. As she was also in India, physically, for more than 30 days in the relevant previous year, her status is to be taken as resident and since the exemption claimed by her is available only to a non-resident, she is not entitled to the exemption. When the matter was taken up in appeal by the assessee before the Commissioner (Appeals), he accepted the assessee's claim with regard to her status as non-resident, but still rejected her claim for exemption, in regard to the deposits in the concerned account, on the ground that the account has been changed to resident account with effect from 20-10-1973 and, therefore, on the relevant valuation date, 31-3-1974, it had ceased to be a Non-resident (External) Account. The assessee aggrieved by this denial is, therefore, in further appeal before us. In the corresponding cross-appeal by the department for this year, WT Appeal No. 355 (Mad.) of 1980, the department objects to the finding of the Commissioner (Appeals) that the status should be taken as non-resident and has also purported to dispute the claim as to the property purchased by the assessee having been let out. Our finding on this dispute will, therefore, dispose of the assessee's ground on this point as well as the department's appeal.
6. The assessee's contention before us against the finding of the Commissioner (Appeals) on the question of the concerned amounts of deposits having ceased to be held in Non-resident (External) Account is that the amount was, in fact, held in a Non-resident (External) Account only on the concerned valuation date and the advice of the Reserve Bank for transfer of the same to the resident account came much later, though the instruction was to transfer it as from an anterior date, i.e., to say with retrospective effect. The learned departmental representative, on the other hand, vehemently opposed the claim of the assessee for exemption on the ground that her status can only be taken as a resident, but not ordinarily resident and not non-resident.
Firstly, it was suggested that the assessee's claim as to the property having been let out was not convincingly proved by evidence. Reliance was placed on the corresponding income-tax assessment where her status has been declared as resident, but not ordinarily resident and the interest on deposits in Non-resident (External) Account has been included in the total income and assessed to tax. Reference was also made to a statement said to have been filed by the assessee in which it is mentioned that the possession of the property, purchased on 17-3-1973, was taken and after white-washing and minor repairs, the house remained vacant till her arrival in India and she occupied it, with her daughter, from November 1973. This, according to the department's contention, showed that the property was not let out but kept vacant. It was further submitted that, from the statements filed by the assessee and her own averment therein, an intention to return and settle down is clear and it is with that purpose that she acquired a property. Since she purchased the property in March 1973, it must be held that she had acquired it for being kept as a dwelling place in India whenever she wanted to occupy it. Reference was made in this connection to the decision of the Supreme Court in the case of CIT v.Durga Prasad More  82 ITR 540 for the proposition that, in matters like this, regard must be had to human probabilities and the assessee's claim that the property was not maintained or made available to her, having been let out before she came to India, does not accord with her own earlier claim and human probabilities. The learned representative, on the other hand reiterated the assessee's claim and contended that when she admittedly arrived in India, in October 1973, and occupied the house, in November 1973, there can be no question of the house being occupied as a dwelling place prior to her arrival.
Reference is made in this connection to the decision of the Madras High Court in J.M. Abdul Aziz v. CIT  48 ITR 602. It is further contended that the alleged discrepancy in the electricity bill, highlighted by the ITO for the claim that the property could not have been let out, is explained with reference to the fact that ' there was a disconnection of the supply and later a reconnection and, in the light of the evidence led by the assessee in the shape of an affidavit of the occupants when it was let out, there can be no doubt as to the fact that the property was, in fact, let out, after its purchase and before the assessee came and occupied it.
7. Having considered the facts and rival submissions we are satisfied that the assessee's claim has force and has to be accepted. On the materials brought on record by the assessee, there can be no manner of doubt that the property purchased by her was, in fact, let out after it was purchased for some period at least. Even the WTO does not seriously dispute this when he says that even if the property be regarded as let out, the letting out is only of a seasonal character and not of a permanent one. Apart from this even if we were to ignore the fact of letting out the property meanwhile, it cannot be said in the absence of any other evidence which supports such a finding that the property was kept or maintained by the assessee as a dwelling place for periods amounting to 182 days or more. Undisputedly, the assessee had come to India only in October 1973, after a long absence of over a decade from the country. Her efforts to cause a house being purchased for her residence after she came, in the early part of 1973, can quite reasonably be attributed to the fact, having regard to possibilities of human conduct, that the transaction of a purchase of a suitable house in a desired place might invole some time-lag, and it is to provide a sufficient margin of time before her intended arrival in India, that she had instructed the purchase of a house. No material has been brought on record by the department which would show that the assessee had intended, even when she purchased the house in February 1973, to arrive in India immediately or on any point of time before her actual arrival in the country and it is with a view to her having a dwelling place whenever she came, from that time that she had caused a house to be purchased. On the other hand the fact that the property was let out, even if it be for a seasonal period, showed that the assessee's intention all along had been to wind up her affairs abroad and come to India only by the time she actually came, and it is only with a view to her having a dwelling place from that time onwards that she had caused the house to be purchased. On the facts of this case, therefore, all that can be said is that she has maintained or caused to be maintained a dwelling place for her from the time she came back to India, in October 1973, and not any point of time earlier. It is undisputed that she was actually physically present in India during the relevant previous year for less than 182 days and, therefore, unless it can be held that she had also maintained a dwelling place or caused one to be maintained for her for 182 days or more during the relevant previous year, she cannot be regarded as resident, but not ordinarily resident and her status will only be nonresident. In the circumstances, in view of our finding above, we agree with the Commissioner (Appeals) that the assessee in the relevant year must be held to be a non-resident and dispose of the objections of the department in its appeal which are, therefore, rejected.
8. Coming to the objection of the assessee and the finding of the Commissioner (Appeals) that notwithstanding her status being non-resident she is ineligible for the exemption because the account had been converted into resident account from 20-10-1973, it is the claim of the assessee,-and undisputed by the department,-as on the relevant valuation date, viz., 31-3-1974, the deposits concerned were actually held in a Non-resident (External) Account and it is only by a subsequent direction or instruction of the Reserve Bank that it was changed to resident account from an anterior date. There is no material before us and we have not been referred to the provisions of any law by the department which would have the effect of converting the non-resident account into a resident account. Even without a communication or order of the Reserve Bank, in the absence of any such provision of law, the mere order or direction of the Reserve Bank to treat a Non-resident (External) Account as a resident account as from an anterior date, cannot have a retrospective effect so as to convert that account into a resident account from such anterior date. In the circumstances, as the deposits on the relevant valuation date actually stood in the Non-resident (External) Account, the Commissioner (Appeals) was not justified in denying the exemption to the assessee.
We, therefore, set aside his order on this point and direct grant of exemption.
10. Coming to the assessment year 1975-76, the only objection pertains to the non-deduction of the income-tax and wealth-tax liabilities for the year 1974-75. We direct allowance of the assessee's claim in the manner indicated in our order for 1974-75 above. In the assessee's appeal for the year 1976-77 also the only objection pertains to non-deduction of income-tax and wealth-tax liabilities for the year 1974-75. We pass a similar order as for the earlier two years and direct the departmental authorities to allow the claim in the manner already indicated. Coming to the assessment years 1977-78 and 1978-79, the assessee, in addition to the claim for deduction of income-tax liability for 1974-75 and wealth-tax liability for the years 1974-75 and 1977-78 on the similar lines as those related to the income-tax and wealth-tax liability for the earlier two years, the other two grounds of objection are to the restriction of the exemption granted to the assessee under Section 5(1)(xxxiii) of the Act, to a sum of Rs. 19,25,000 as against exemption claimed on Rs. 23,40,876 for the assessment year 1977-78 and Rs. 24,76,524 for the assessment year 1978-79 (sic). Section 5(1)(xxxiii), which applied to an assessee being a person of Indian origin and who was ordinarily residing in a foreign country and who on leaving such country, has returned to India with the intention of permanently settling down therein, provides for exemption of moneys and the value of assets brought by him into India and the value of assets acquired by him out of such moneys. The exemption is available for a period of seven successive assessment years commencing with the assessment year next following the date on which such person returned to India. This exemption was introduced by the Finance Act, 1976, with effect from 1-4-1977. The Commissioner (Appeals) accepted the assessee's claim for exemption up to a sum of Rs. 19,25,000, representing the money actually brought into India from abroad but declined to allow the exemption on the balance on the ground that such balance represented interest and accretion thereto, which is not covered by the words "the value of assets acquired by the assessee out of such moneys". According to the Commissioner (Appeals), only assets such as house property and shares acquired by the assessee out of moneys brought by him would qualify under the words "the value of assets acquired by him out of such moneys". The department is in appeal against his order accepting the assessee's claim partially. The contention of the department is that since the exemption itself was introduced by the Finance Act, 1976, with effect from 1-4-1977, it can only apply to persons returning to India on or after 1-4-1977 and not to persons who had returned to India already in the past.
11. The learned departmental representative submitted in this connection that since the exemption is available for a period of seven years from the period of assessment year 1977-78, it does not contemplate persons arriving before 1-4-1976, as in the case of the assessee who came to India on 20-10-1973, because the seven year period of exemption by the very language of the enactment will not be available. It was further argued that the exemption is open only to persons who are returning with the intention of permanently residing therein, but in this case the assessee has stated in her letter, dated 20-11-1976, to the WTO, a copy of which has been furnished before us, that she has not yet decided to continue to stay permanently in India unless certain provisions under wealth-tax law are clarified, and as this would take some time she has decided to let the external account continue. We find no merit in the department's stand on the question of her intention. The statement in her letter, referred to above, does not necessarily show that she had not intended to settle down permanently in this country. The facts that she is a citizen of India and after a period of over a decade abroad has returned and has also acquired a house for her residence, clearly show her intention to settle down in this country and it is only to indicate the uncertainty of tax liability that she has expressed her fears about her not continuing.
Furthermore, the grounds of the appeal, taken before us, do not admit of any dispute on this point. In the circumstances, it is clear that the objection of the department on this point cannot stand. As regards its contention that the exemption is available only to persons who come to India after 1-4-1976, this is not warranted by the language of the provisions of Section 5(1)(xxxiii) nor by any other indication. The mere fact that the section was introduced with effect from 1-4-1977 by the Finance Act, 1976, i.e., from the assessment year 1977-78, does not mean that the exemption is not open to an assessee who has come before that date, in regard to the assessment year 1977-78 onwards, if the language otherwise permits the exemption. The further provision contained in the provision to the clause that the exemption will apply for a period of seven successive assessment years commencing with the assessment year next following the date on which the person returned to India does not also, in our view, negative the exemption. The only effect of this proviso, in a case like that of the assessee's, would be that exemption would be restricted in the sense that it will be available only for such number of the assessment years commencing from 1-4-1977 as could fall within the period of seven successive assessment years following the date of her arrival in India. In the instant case of the assessee before us, since she arrived in India on 20-10-1973, the seven assessment year periods will have to be reckoned from the assessment year 1974-75 and the exemption will be available to her only for four assessment years commencing from 1977-78. For the three assessment years following her date of arrival viz., 1974-75 to 1976-77, the exemption under Section 5(1)(xxxiii) itself will not apply as it begins only from 1977-78. In the circumstances, we reject the contention of the department.
12. Coming to the assessee's appeal, we accept the assessee's contention that the exemption will apply also to the accretion of the moneys brought in by way of interest or otherwise which are referable to, or arise in relation to, moneys brought in by the assessee from outside the country. The amounts by way of accretions or interest earnings on the original amounts brought in by the assessee undoubtedly represent the assets and they have been acquired out of or with the aid of the moneys originally brought in. Therefore, in our view, they clearly fall within the scope of Section 5(1)(xxxiii) and the Commissioner (Appeals) is not, in our view, correct in stating that only the properties or assets purchased out of such moneys brought in by the assessee would be eligible and not any accretion or interest earning thereon. He does not appear to dispute the position, that if the assessee had purchased some property or other assets with the moneys brought in and the value of such property or assets goes up with the efflux of time, then the entire such value is eligible for exemption. We do not see why it should be different where moneys brought in increase by efflux of time on account of the interest earnings thereon. We, therefore, uphold the assessee's contention.
13. In the result, the assessee's appeals are treated as allowed and the department's appeals stand dismissed.