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Commissioner of Wealth-tax Vs. H.H. Sethu Parvathi Bayi and H.H. Lekshmi Bayi - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberIncome-tax Referred Case Nos. 28 and 37 of 1976
Judge
Reported in[1979]116ITR135(Ker)
ActsWealth Tax Act, 1957 - Sections 5(1) and 5(1A)
AppellantCommissioner of Wealth-tax
RespondentH.H. Sethu Parvathi Bayi and H.H. Lekshmi Bayi
Appellant Advocate P.A. Francis and; P.K. Raveendranatha Menon,
Respondent Advocate K. Sreedharan and; N. Sreenivasan, Advs.
Excerpt:
- - what exactly is the scope and limit of exemption enjoyed by an assessee under the combined operation of section 5(1)(xv) and (xvi) read with section 5(1a) ? we may mention that the maximum amount of investment in the securities and deposits mentioned in clauses (xv) and (xvi) have been specified by the government in appropriate notifications......of rs. 70,000 in addition to the aggregate amount of rs. 1,50,000 which represented the maximum limit of exemption to which she was entitled under section 5(1) of the act. the wto and the aac negatived the assessee's claim. but, on further appeal, the appellate tribunal agreed with the assessee's contention and allowed the exemption in respect of the entire amount of rs. 70,000 over and above the maximum limit of rs. 1,50,000 to whicn she was entitled for exemption under the provisions of section 5(1) of the act. at the instance of the revenue, the question of law has been sent up for our opinion.3. the facts are identical in i.t.r. no. 28 of 1976, with the only difference that h. h. sethu parvathi bayi, trivandrum, is the assessee in that case. section 5(1) of the act, in so far as.....
Judgment:

Gopalan Nambiyar, C.J.

1. These two references are by the Income-tax Appellate Tribunal, Cochin Bench. The question of law referred for our opinion in I.T.R. No. 28 of 1976 is :

'Whether, on the facts and in the circumstances of the case, and on the interpretation of Section 5(1A) of the W.T. Act, 1957, the Appellate Tribunal is right in law in holding that the assessee is entitled to exemption of Rs. 70,000 invested by her in National Defence Certificates and in Defence Deposit Certificates in addition to the overall exemption of Rs. 1,50,000 granted to her by the WTO under Section 5(1) of the Act ?' and in I.T.R. No. 37 of 1976, the question of law referred is:

'Whether, on the facts and in the circumstances of the case, and on the interpretation of Section 5(1A) of the W.T. Act, 1957, the Appellate Tribunal is right in law in holding that the assessee is entitled to exemption of Rs. 70,000 invested by her in National Defence Certificates and in Defence Deposit Certificates in addition to the overall exemption of Rs. 1,50,000 granted to her by the WTO under Section 5(1) of the Act ?' The statement of facts has been sent up by the Tribunal in I.T.R. No. 37 of 1976 ; and in I.T.R, No. 28 of 1976, the Tribunal stated that as the Tribunal had passed a common order in respect of both the assessees and the facts are identical, and a statement of the case had been sent up in I.T.R. No. 37 of 1976, the said statement is made an annexure to the case in I.T.R. No. 28 of 1976 also.

2. The facts disclosed by the statement of the case in I.T.R. No. 37 of 1976 are as follows : The assessee is Her Highness Smt. Lekshmi Bayi, Trivandrum. The assessment year involved is 1973-74. The assessment proceedings are under the W.T. Act. The valuation date is on March 31, 1973. The assessee held National Defence Certificates and Defence Deposit Certificates of the value of Rs. 70,000 from even prior to March 1, 1970. In proceedings for assessment to wealth-tax, she claimed exemption for this amount of Rs. 70,000 in addition to the aggregate amount of Rs. 1,50,000 which represented the maximum limit of exemption to which she was entitled under Section 5(1) of the Act. The WTO and the AAC negatived the assessee's claim. But, on further appeal, the Appellate Tribunal agreed with the assessee's contention and allowed the exemption in respect of the entire amount of Rs. 70,000 over and above the maximum limit of Rs. 1,50,000 to whicn she was entitled for exemption under the provisions of Section 5(1) of the Act. At the instance of the revenue, the question of law has been sent up for our opinion.

3. The facts are identical in I.T.R. No. 28 of 1976, with the only difference that H. H. Sethu Parvathi Bayi, Trivandrum, is the assessee in that case. Section 5(1) of the Act, in so far as the same is material, reads as follows :

'5. Exemption 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.......

(xv) deposits under any scheme framed by the Central Government and notified by it in this behalf in the Official Gazette, to the extent to which the amounts of such deposits do not exceed the maximum amount permitted to be deposited therein ;

(xvi) ten year treasury savings deposit certificates, fifteen-year annuity certificates, deposits in post office savings banks, post office cash certificates, post office national savings certificates, post office national plan certificates and twelve-year national plan savings certificates, ten-year defence deposits certificates and twelve-year national defence certificates, to the extent to which the amount of such certificates or deposits do not exceed in each case the maximum amount permitted to be invested or deposited therein;......... '

4. And Section 5(1A) of the Act reads :

'(1A) Nothing contained in Sub-section (1) shall operate to exclude from the net wealth of the assessee any assets referred to in Clauses (xv), (xvi), (xxii), (xxiii), (xxiv), (xxv), (xxvi), (xxvii), (xxviii), (xxix), (xxxi) and (xxxii) [not being deposits under the Post Office Savings Bank (Cumulative Time Deposits) Rules, 1959], to the extent the value thereof exceeds, in the aggregate, a sum of one hundred and fifty thousand rupees :

Provided that where the assets include any assets referred to in Clause (xv) or Clause (xvi) [not being deposits under the Post Office Savings Bank (Cumulative Time Deposits) Rules, 1959], which have been held by the assessee continuously from a date prior to the 1st day of March, 1970, and the value of the assets so included exceeds the limit of one hundred and fifty thousand rupees by any amount, such limit shall be raised by the said amount.'

5. The question of law to be answered in this case lies in a small compass. What exactly is the scope and limit of exemption enjoyed by an assessee under the combined operation of Section 5(1)(xv) and (xvi) read with Section 5(1A) We may mention that the maximum amount of investment in the securities and deposits mentioned in Clauses (xv) and (xvi) have been specified by the Government in appropriate notifications. It may perhaps be enough to notice that the maximum amount which can be invested in National Defence Certificates is Rs. 35,000. While Section 5(1) by Clauses (i) et seq. lists the items of wealth in respect of which wealth-tax shall not be payable, Section 5(1A) put a maximum limit of Rs. 1,50,000, in respect of the exemption to be earned from the net wealth of assets referred to in Clauses (xv), (xvi), (xxii), (xxiii), (xxiv), (xxv), (xxvi), (xxvii), (xxviii), (xxix), (xxxi) and (xxxii) of Section 5(1). Then follows the proviso. That proviso enacts that where the assets include those referred to in Clause (xv) or (xvi) held prior to 1st March, 1970, and their value exceeds Rs. 1,50,000, 'such limit shall be raised by the said amount'. The words underlined are clear and specific. Having fixed the ceiling limit for exemption from net wealth in respect of certain categories under Section 5(1A), the proviso enacts that where the net wealth includes items under (xv) and (xvi) of Section 5(1A), above the ceiling limit, held prior to March 1, 1970, the ceiling shall be raised by the amount of such excess. On the plain language of the proviso, in the contingency provided, the exemption limit shall be raised to the extent of such excess, and no more. We are not prepared, as the Tribunal was, to whittle down the plain meaning deduced from the language of these provisions by any presumed or assumed intention of the legislature as gathered from the speech of the Finance Minister introducing the Finance Act of 1970.

6. In the light of our conclusion, we would answer the questions referred in the negative, that is, in favour of the department and against the assessee. We make no order as to costs.

7. A copy of our judgment under the signature of the Registrar and the seal of this court will be forwarded to the Income-tax Appellate Tribunal, Cochin Bench, as required by law.


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