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Wealth-tax Officer Vs. Smt. Manorama Devi BirlA. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberWT APPEAL NOS. 1034 TO 1036 (CAL.) OF 1982 [ASSESSMENT YEARS 1975-76, 1976-77 AND 1977-78]
Reported in[1984]9ITD105(Cal)
AppellantWealth-tax Officer
RespondentSmt. Manorama Devi BirlA.
Excerpt:
- .....with birla group of officers fund. the wto was of the view that the balance in the provident fund account ceases to be provident fund money after retirement and so it is liable to wealth-tax. the wto, accordingly, included the amount of rs. 70,162 in the net wealth of the assessee for the assessment year 1977-78.3. the matter was carried in appeal before the commissioner (appeals). it was contended on behalf of the assessee that the delay in refunding the amount cannot be attributed to her. in support of the claim for exemption in respect of the amount deposited in the provident fund account, the assessee placed reliance on the order of the chandigarh bench of the tribunal dated 18-3-1982 in it appeal no. 193 (chd.) of 1980. the commissioner (appeals) held that considering the.....
Judgment:
ORDER

Per Shri D. N. Sharma, Judicial Member - As all these appeals filed by the department for the assessment years 1975-76, 1976-77 and 1977-78 arise out of the consolidated order, dated 17-9-1982 passed by the Commissioner (Appeals), they were heard together and for the sake of convenience, are being disposed, of by a single order.

2. The facts relevant for the purposes of the present appeals briefly stated, are that the assessee was an employee of Birla Gwalior (P.) Ltd. She retired from service on 31-3-1975. The assessee had a deposit of Rs. 70,162 on 31-3-1977, the valuation date relevant to the assessment year 1977-78, with Birla Group of Officers fund. The WTO was of the view that the balance in the provident fund account ceases to be provident fund money after retirement and so it is liable to wealth-tax. The WTO, accordingly, included the amount of Rs. 70,162 in the net wealth of the assessee for the assessment year 1977-78.

3. The matter was carried in appeal before the Commissioner (Appeals). It was contended on behalf of the assessee that the delay in refunding the amount cannot be attributed to her. In support of the claim for exemption in respect of the amount deposited in the provident fund account, the assessee placed reliance on the order of the Chandigarh Bench of the Tribunal dated 18-3-1982 in IT Appeal No. 193 (Chd.) of 1980. The Commissioner (Appeals) held that considering the facts and circumstances of the case, the sum of Rs. 70,162 should be excluded from the total wealth of the assessee. Dissatisfied with the decision of the Commissioner (Appeals), the department has filed separate appeals for the assessment years under consideration.

4. We shall first take up the appeal for the assessment year 1977-78. Shri S. P. Chaliha, the learned departmental representative, has contended before us that after the retirement of the assessee from service, the benefit of the exemption available under section 5(1) (xvii) of the Wealth-tax Act, 1957 (the Act) was lost to her as she was no longer in service on the valuation date relevant to the assessment year 1977-78. The learned departmental representative laid stress on the words being a salaried employee occurring in section 5(1) (xvii) in support of the submission that the benefit of exemption under section 5(1) (xvii) is available only to an assessee who is still in service and not to an employee who retired from service before the relevant valuation date.

5. Shri A. K. Gupta, the learned authorised representative for the assessee, has on the other hand, submit that the amount standing to the credit of the assessee in her provident fund account retained its character as the provident fund even after retirement and that for this reasons, the amount deposited in the provident fund account of the assessee is not to be included in her net wealth by virtue of the exemption available under section 5(1) (xvii). It is further submitted that the amount deposited in the provident fund account of the assessee was not made available to her immediately after her retirement and that it was only after the necessary sanction had been accorded after the valuation date that the amount became payable and was actually paid to her. It was, thus, submitted that for all these reasons, the Commissioner (Appeals) was justified in excluding the amount deposited in the provident fund account of the assessee from her net wealth.

6. In reply, the learned departmental representative submitted that there is nothing on the record to show that the assessee made proper and reasonable efforts to get the moneys deposited in her provident fund account and that she cannot take advantage of the delay in receiving payment of the moneys deposited in her provident fund account in support of her claim for exemption under section 5(1) (xvii).

7. We have considered the rival submissions and the facts on record. It cannot be gainsaid that in view of the inclusive of the word assets as given in section 2(e) of the Act, the amount standing to the credit of the assessee in her provident fund account in an asset. Section 2(m) defines the expression net wealth as the amount by which the aggregate value computed in accordance with the provisions of the Act of all assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date is in excess of the aggregate value of all the debts owned by the assessee on the valuation date other than the debts enumerated in sub-clauses (i), (ii) and (iii) of clause (m). Now net wealth of an assessee is chargeable to wealth-tax under section 3 of the Act. Certain assets are exempted from inclusion in the nett wealth of an assessee and they are catalogued in section 5 (1). Section 5(1) (xvii) lays down that the amount standing to the credit of an assessee, being a salaried employee, in any provident fund maintained by his employer to which the Provident Funds Act, 1925, applies or which is a recognised provident fund within the meaning of clause (38) of section 2 of the Income-tax Act, 1961 (the 1961 Act) shall not be included in the net wealth of the assessee and wealth-tax shall not be payable in respect of this amount.

The Commissioner (Appeals) while holding that the amount deposited in the provident fund account of the assessee should not be included in her net wealth, has also followed the order of the Chandigarh Bench of the Tribunal in case of Dr. T. R. passed in [IT Appeal No. 193 (Chd.) of 1980, dated 18-3-1982]. In that case, the assessee had retired from the service on 29-2-1976. The order sanctioning payment of the provident fund was made on 10-5-1976, i.e., after the valuation date which was 31-3-1976. It was held by the Tribunal in that case that as on such, the valuation date nothing has been sanctioned to the assessee and as such, the position in regard to the assessee, insofar as the question of taxation is concerned, continued. It was, thus, held that the amounts were not includible in the net wealth of the assessee.

8. The expression an assessee being a salaried employee and in any provident fund maintained by his employer, in our opinion, connote that the assessee whose provident fund moneys are exempt is one who is presently serving as an employee. The provision contained in section 5(1) (xvii) is attracted if two conditions are satisfied, viz.,

(i) the amount in respect of which exemption is claimed as standing to the credit of the assessee in any provident fund maintained by his employer; and

(ii) the assessee should be a salaried employee and the provident fund is maintained by her employer.

Both these conditions must co-exist to enable the assessee to claim exemption under section 5(1) (xvii). This benefit is lost if one of the two conditions ceases to exist. The facts as stated above, go to show that after her retirement from service, the amount standing to the credit of the assessee in her provident fund account continued to remain deposited in that account even after the relevant valuation date. So, on the relevant valuation date one of the conditions stood fulfilled. However, on the relevant date the assessee was no longer an employee. So, the second condition is not satisfied in this case, with the result that section 5(1) (xvii) is not attracted and the assessee is not entitled to the exemption available thereunder. The amount deposited in the provident fund account belonged to the assessee on the valuation date deposit the fact that the order sanctioning payment of the amount was passed after the valuation date. Even though the amount was not paid to the assessee on or before the valuation date, yet it formed part of her assets as the amount belonged to her even on the valuation date. By virtue of section 2(m), the amount in question was includible in the net wealth of the assessee and as she is not entitled to the benefit of the exemption under section 5(1) (xvii), the amount in question cannot be excluded from her net wealth despite the fact that the sanction order not become entitled to the relevant valuation date. The assessee does not become entitled to the exemption claimed simply on the basis that even on the valuation date the character of the amount continued to be that of a deposit in the provident fund account of the assessee. As has already been held above, since the assessee was not an employee on the relevant valuation date, she cannot be held entitled to the exemption available under section 5(1) (xviii).

9. In view of what has been said above, the departmental appeal for the assessment year 1977-78 succeeds and is hereby allowed. The order of the commissioner (Appeals) on the point under consideration is set aside and that of the WTO is restored.

10. In the appeals for the assessment years 1975-76 and 1976-77, the department has taken up the ground that the Commissioner (Appeals) erred in excluding the sum of Rs. 62,154 for the assessment year 1975-76 and the amount of Rs. 65,572 for the assessment year 1976-77 from the total wealth of the assessee. This ground does not, however, arise out of the impugned order passed by the Commissioner (Appeals) for the assessment years 1975-76 and 1976-77. The appeals for these two years are clearly misconceived and incompetent.

11. The departmental appeals for the assessment years 1975-76 and 1976-77 are, accordingly, dismissed.


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