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Commissioner of Wealth-tax Vs. S.P. Shanmugha Kesari - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberT.C. Petition No. 182 of 1978
Judge
Reported in[1980]121ITR403(Mad)
ActsBanking Regulation Act, 1949; Wealth Tax Act, 1957 - Sections 5(1) and 27(3)
AppellantCommissioner of Wealth-tax
RespondentS.P. Shanmugha Kesari
Appellant AdvocateA.N. Rangaswamy, ;Nalini Chidambaram and ;C.V. Rajan, Advs.
Respondent AdvocateP. Sathasivam, Adv.
Excerpt:
- - but, on appeals, the aac and the tribunal have granted the exemption under section 5(1)(xxvi). the cwt, not being satisfied with the conclusion of the tribunal, has filed this petition, after failing in the reference application before the tribunal......the appellate tribunal was right in law in holding that the amount deposited in a branch of the indian bank located in colombo is a deposit held in a bank to which the banking regulation act, 1949, applies ' 2. the assessee, an individual, in submitting wealth-tax return for the assessment year 1975-76, claimed exemption under section 5(1)(xxvi) of the w.t. act in respect of a deposit of rs. 13,500 made with the indian bank at its colombo branch. the wto rejected this for exemption. but, on appeals, the aac and the tribunal have granted the exemption under section 5(1)(xxvi). the cwt, not being satisfied with the conclusion of the tribunal, has filed this petition, after failing in the reference application before the tribunal.3. section 5(1)(xxvi) of the w.t. act, in so far as it is.....
Judgment:

Sethuraman, J.

1. In this petition under Section 27(3) of the W.T. Act, the CWT has asked for reference of the following two questions :

' 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in allowing the assessee's claim for exemption under Section 5(1)(xxvi) of the Wealth-tax Act, 1957 ?

2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the amount deposited in a branch of the Indian Bank located in Colombo is a deposit held in a bank to which the Banking Regulation Act, 1949, applies '

2. The assessee, an individual, in submitting wealth-tax return for the assessment year 1975-76, claimed exemption under Section 5(1)(xxvi) of the W.T. Act in respect of a deposit of Rs. 13,500 made with the Indian Bank at its Colombo branch. The WTO rejected this for exemption. But, on appeals, the AAC and the Tribunal have granted the exemption under Section 5(1)(xxvi). The CWT, not being satisfied with the conclusion of the Tribunal, has filed this petition, after failing in the reference application before the Tribunal.

3. Section 5(1)(xxvi) of the W.T. Act, in so far as it is material, runs as follows :

' 5. (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--...

(xxvi) any deposits with a banking company to which the Banking Regulation Act, 1949 (X of 1949), applies (including any bank or banking institution referred to in Section 51 of that Act)......'

4. The only question for consideration is whether the deposit held by the assessee in the Colombo branch of the Indian Bank is a deposit with a banking company to which the Banking Regulation Act of 1949 applies.

5. The definition of a banking company in Section 5(c) of the Banking Regulation Act (Act X of 1949) reads as follows :

' ' Banking company ' means any company which transacts the business of banking in India.'

6. Indian Bank admittedly transacts business in India and, therefore, is a ' banking company ' as defined in the Banking Regulation Act and, therefore, will come within the scope of Section 5(1)(xxvi) of the W.T- Act, 1957, and there is no dispute about this. However, what the learned counsel for the department contends is that in this particular case the deposit has been made with the branch of the bank at Colombo, that is, outside India, and, therefore, Section 5(1)(xxvi) of the W.T. Act, will not apply. We are unable to agree with this contention, because Section 5(1)(xxvi) does not deal with tha place of the deposit, but merely refers to a deposit with a banking company to which the Banking Regulation Act, 1949, applies. It is not the case of the learned counsel for the department that the branch of Indian Bank at Colombo is an independent banking company different from the banking company, viz., Indian Bank, transacting business in India. Further, Section 5(1)(xxvi) of the W.T. Act does not require that the deposits must be in India with a banking company to which the Banking Regulation Act, 1949, applies. In the absence of any such restriction found in the statute itself, so long as the deposit has been made with a banking company to which the Banking Regulation Act applies, whichever the place of deposit may be, Section 5(1)(xxvi) will be attracted.

7. In these circumstances, we are of the opinion that the Tribunal was right in holding that the deposit by the assessee with the Colombo branch of the Indian Bank will fall within the scope of Section 5(1)(xxvi) of the W.T. Act, 1957. Consequently, the Tribunal cannot be said to have committed any error. The answer to the question is patent and, in that sense, no question of law can be said to arise out of the order of the Tribunal.

8. The petition is dismissed with costs. Counsel's fee Rs. 250.


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