1. These two appeals are preferred by the assessee and relate to the assessment years 1977-78 and 1978-79. The appeals are against the orders passed by the Commissioner in exercise of his powers under Section 25(2) of the Wealth-tax Act, 1957 ('the Act').
2. The order of the Commissioner sets out the computation of the figure of wealth as under: movable and immovable: Rs. 10,90,846.97 Less: Exemption under movable and immovable: Rs. 11,00,371.77 Less: Exemption under Section 5(iv) and (xxvi) Rs. 2,50,000.00 Rs. 8,50,371,77 The Commissioner has stated that the WTO granted exemption of the net amount in each year under Section 5(1)(xxxiii) of the Act as claimed by the assessee. According to the Commissioner, this was erroneous.
3. The Commissioner stated that the assessee, an Indian citizen, was living with her husband in Australia and her husband died in a car accident in March 1974. She returned to India on 6-5-1974 with two minor children. Most of the assets held in Australia, according to the Commissioner, consisted of compensation received on account of death of her husband and the amounts were not brought to India when she returned on 6-5-1974 but were remitted during the accounting years relevant to the assessment years 1977-78 and 1978-79. With the amounts remitted the assessee acquired assets in India. According to the Commissioner, Section 5(1)(xxxiii) was introduced in the Act by the Finance Act, 1976, with effect from 1-4-1977. The Commissioner has stated that the assessee undoubtedly was a person of Indian origin who returned to India with the intention of permarently residing in India. He stated that she did not bring any moneys or assets into India at the time of her return, money having been received very much subsequent to 6-5-1974. According to the Commissioner, the exemption under Section 5(1)(xxxiii) can only be prospective or, in other words, it would apply only to persons who returned to India after 1-4-1976 and not to persons who returned earlier. He negatived the plea of the assessee that there was nothing in the Act to restrict the exemption on the lines stated by him. The Commissioner, therefore, held that the WTO was not justified in granting exemption under Section 5(1)(xxxiii) and he, therefore, set aside the assessments and directed the WTO to re-do them bearing in mind his observations.
4. In the appeals before us, the learned counsel submitted that the requirements of Section 5(1)(xxxiii) were satisfied and the WTO was justified in granting the exemption. He pleaded for the orders of the WTO being restored. The learned departmental representative, on the other hand, stated that1 on the facts enumerated in the order of the Commissioner, it was clear that exemption had wrongly been granted by the WTO, and it, therefore, had to be withdrawn and that was what the order of the Commissioner sought to achieve.
5. We have considered the rival submissions. The provisions of Section 5(1)(xxxiii) read: 5. Exemptions in respect of certain assets.--(1) Subject to the provisions of Sub-section (1A) wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee-- (xxxiii) in the case of an assessee, being a person of Indian origin who was ordinarily residing in a foreign country and who, on leaving such country has returned to India with the intention of permanently residing therein, moneys and the value of assets brought by him into India and the value of the assets acquired by him out of such moneys: Provided that this exemption shall apply only for a period of seven successive assessment years commencing with the assessment year next following the date on which such person returned to India.
Explanation.--A person shall be deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided India ; The aforesaid provisions were introduced by the Finance Act, 1976, and were to come into effect from 1-4-1977. The explanatory memorandum spells out the object of the exemption as under (extracted from Commentary on Three New Taxes, Vol. 1, 1979 edition, by Sampath Iyengar): Exemption in respect of assets, etc., brought into India by persons of Indian origin--New Section 5(1)(xxxiii).
49.1. The Finance Act has inserted a new section (xxxiii) in Section 5(1) of the Wealth-tax Act to provide for exemption from wealth-tax of the money and value of assets brought into, India by persons of Indian origin who are ordinarily residing in foreign countries in cases where such persons return to India with the intention of permanently residing therein. The value of assets acquired by them out of the moneys brought into India will also qualify for this exemption. The exemption will be available only for seven assessment years commencing with the assessment year next following the date on which such person returns to India. For this purpose, a person shall be deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided India.
49.2. This amendment will take effect from the 1st April, 1977 and will, accordingly, apply in relation to the assessment year 1977-78 and subsequent years. (pp. 414-15) The exemption itself, on a plain reading of the section, will have application only from the assessment year 1977-78 with reference to the date of its introduction. However, it applies to all persons of Indian origin who were ordinarily residing in a foreign country and who on leaving such country had returned to India with the intention of permanently residing therein. The expression used, viz., 'returned to India' is in the past tense. Therefore, for a particular assessment to which the exemption applies, all persons who satisfy other requirements of the section and who had returned to India prior to the first day of the assessment year would be entitled to the exemption. The section does not stipulate that the event of the return to India should have taken place subsequent to a particular date. The only restriction laid down by the section is by the proviso which states that the exemption would be applicable only for a period of seven successive assessment years commencing with the assessment year next following the date on which such person returned to India. In the present case, the assessee returned to India on 6-5-1974. The seven successive assessment years commencing with the assessment year next following the date on which she returned to India would be the assessment years 1975-76 to 1981-82, both inclusive. Since the provisions of Section 5(1)(xxxiii) had not come into being for the assessment years 1975-76 and 1976-77, the assessee obviously could not get exemption for those two years. The unexpired period in terms of the proviso would cover the assessment years 1977-78 to 1981-82 alone. The WTO has granted exemption only for the assessment years 1977-78 and 1978-79 as at present. For both these years, on a plain reading of the section, the assessee is entitled to the exemption. At this stage, we may state that we are unable to agree with the Commissioner lhat because there was some delay in bringing the money into Tndia, the assessee would forfeit the exemption, because the section does not require that the money should be brought along with the assessee. Obviously, because of foreign exchange remittance regulations, etc., transmission of amounts from a foreign country may take some time. As we have already stated, the period of exemption is to be calculated in terms of the proviso with reference to the date on which the person returned to India and there are no other restrictions.' We, therefore, come to the conclusion that the WTO was not in error in allowing the exemption since the only case of the revenue is that the assessee had returned prior to 1-4-1976 and further the amounts were remitted only later and were not brought with the assessee, and it is not the case of the revenue that any of the other requirements of Section 5(1)(xxxiii) were not satisfied. We, therefore, set aside the order of the Commissioner for each of the assessment years under consideration and restore the orders of the WTO.