Wealth Tax Act, 1957

M/s Lok Nath and Company filed wealth‑tax returns late for the years 1959‑60 to 1967‑68. The Wealth‑Tax Officer, after issuing a notice under s.18(1)(a), accepted the assessee’s revised returns and made an assessment, incorrectly stating it was under s.16(3) though it was in substance under s.16(1). The Commissioner, b…

The appellant, Amrit Banaspati Co. Ltd., owned a residential flat in Mumbai and declared its value under self‑assessment rules (Rule 3‑7) of Schedule III of the Wealth Tax Act, 1957. The Assessing Officer (AO) found a large disparity between the declared value and the market value estimated by the Departmental Valuatio…

The Commissioner of Wealth Tax appealed against a Calcutta High Court judgment that held the widow of Clive H. Kinnison (a non‑resident Englishwoman) was entitled to exclude from her wealth‑tax net the value of her life interest in a testamentary trust comprising Indian shares and agency commissions. The High Court tre…

The assessee, an oil‑mill owner, gifted part of his machinery to his wife and three minor children and a firm was formed by his wife and another person. The firm leased the mill premises and machinery and the assessee rendered management services, receiving commission. The assessee had large losses carried forward from…

The petitioner, after being granted a three‑month extension to file his wealth‑tax return, filed it four months later and was levied a penalty of 0.5% of his net wealth for each month of delay under s.18(1)(a) of the Wealth Tax Act, 1957 (as amended by the Finance Act, 1969). He challenged the constitutional validity o…

The Supreme Court examined whether the term "jewellery" in Section 5(1)(viii) of the Wealth Tax Act, 1957, as it stood before the 1971 amendment and the addition of Explanation 1, covered gold ornaments that did not contain precious or semi‑precious stones. The High Court had held that such ornaments were excluded, but…

The respondent, a shareholder, valued her shares at break‑up value for wealth‑tax assessment, which the Wealth Tax Officer rejected. The Appellate Assistant Commissioner partially allowed her appeal, but the Commissioner appealed to the Appellate Tribunal, which dismissed the appeals. While the Tribunal appeal was pend…

The Supreme Court examined whether tax liabilities arising from settlements under the Taxation on Income (Investigation Commission) Act, 1947, which remained unpaid at the valuation dates, could be deducted as debts owed in computing net wealth under the Wealth‑Tax Act, 1957. The assessee companies argued that the unpa…

Mis. Alagendran Finance Ltd. filed income‑tax returns for assessment years 1994‑95, 1995‑96 and 1996‑97, claiming a deduction under the Lease Equalisation Fund (LEF). The assessment orders accepted the LEF claim. In 2004 the Assessing Officer initiated reassessment proceedings for three unrelated items (share‑issue exp…

The respondent, a Hindu Undivided Family (HUF) that was a partner in a firm, effected a partial partition on 13‑April‑1979 and the Income Tax Officer (ITO) recognised it under Section 171(2) of the Income Tax Act, 1961. For AY 1980‑81 the HUF filed a return excluding income from the partitioned assets. The Finance Bill…

The appellant, a Hindu Undivided Family co‑owner of a 30,663 sq. m. plot in Bangalore, entered into a development agreement for constructing residential flats and claimed that the land remained exempt from wealth tax while the building was under construction. The Revenue argued that under Explanation 1(b) to Section 2(…

The UAE Exchange Centre, a UAE company, obtained RBI permission under the Foreign Exchange Regulation Act to operate liaison offices in India for limited functions such as receiving remittance data, printing cheques/drafts and couriering them to beneficiaries. The Authority for Advance Rulings held that income from the…

The assessee, a Hindu Undivided Family, challenged the valuation of its residential properties for the assessment years 1977-78 and 1978-79, contending that Rule 1BB of the Wealth Tax Rules, 1957 (effective 1 April 1979) should be applied even though the assessments were made after the rule’s introduction. The Revenue …

A Hindu male governed by the Dayabhaga school died intestate, leaving his widow and two daughters. The widow and daughters entered into an agreement to form a Hindu Undivided Family (HUF) and the widow contributed her share of the inherited property to the HUF, omitting the income from her tax returns for AY 1974-75 an…

The Income Tax Officer had completed assessments for 1969-70 and 1971-72, accepting the assessee's claim of a long‑term capital loss on the sale of shares. Later, a letter from the Deputy Director of the Directorate of Inspection, supported by documentary evidence, indicated that the fair market value of those shares w…

The Commissioner of Wealth Tax, Gujarat sought to assess Ellis Bridge Gymkhana, an unincorporated club, for wealth tax for assessment years 1970‑71 to 1977‑78, arguing that the club fell within the term “individual” in Section 3 of the Wealth Tax Act, 1957. The club contended that an association of persons is not an in…

The Nizam of Hyderabad (Sir Mir Osman Ali Khan) challenged the inclusion of certain immovable properties and an annual payment of Rs.25 lakhs in his net wealth for wealth‑tax purposes. The Supreme Court held that properties for which full consideration was received and possession handed over, even without a registered …

The assessee, while computing his net wealth for the assessment year 1962-63, claimed deductions for debts representing estimated liabilities of income tax, wealth tax and gift tax. The Wealth Tax Officer rejected the claim, stating that estimated liabilities could not be treated as debts on the valuation date. The App…

The assessee, K.S.N. Bhatt, claimed deductions in his wealth‑tax returns for income‑tax, wealth‑tax and gift‑tax liabilities, arguing that these amounts were debts owed on the valuation dates for the assessment years 1964‑65 to 1967‑68. The Wealth Tax Officer allowed only part of the deductions; the Appellate Assistant…

The appellant, the legal representative of the late S.N. Wadiyar, challenged the valuation of vacant land appurtenant to Bangalore Palace for wealth tax purposes. The Wealth Tax Officer had valued the land at market rates, ignoring the restrictions imposed by the Urban Land (Ceiling and Regulation) Act, 1962, which lim…

Dr. Karan Singh claimed ownership of six boxes of jewellery and valuable articles stored in the Srinagar Toshakhana, seeking exemption under section 5(1)(xiv) of the Wealth Tax Act as heirlooms. The High Court refused his application for a physical inspection of the items, holding that no useful purpose would be served…

The dispute concerned jewellery belonging to two trusts created by the Nizam of Hyderabad. An arbitration award directed the Union of India to pay Rs 180 crore to purchase the items, which was challenged by the Union and the trustees under Sections 15 and 16 of the Arbitration Act, 1940. Public‑spirited intervenors fil…

The Supreme Court examined the constitutionality of the Special Bearer Bonds (Immunities and Exemptions) Ordinance, 1981 and the subsequent Act, which granted anonymity and tax exemptions to holders of special bearer bonds intended to canalise black money. The petitioners argued that the President lacked authority unde…

The Nizam created a trust to fund his Haj pilgrimage and related religious activities abroad; after his death the trust became a public charitable and religious trust. Government restrictions prevented sending money overseas, so the trustees resolved to spend the trust's income within India and obtained an order under …

The Commissioner of Wealth Tax, Patna, appealed against the assessment of Raghubir Narain Singh's net wealth under the Wealth Tax Act, 1957. The issues concerned how to value assets and debts, including pending decree amounts and agricultural income‑tax liabilities, for computing net wealth under Section 7 and Section …

The Commissioner of Wealth Tax, Bihar appealed against the Patna High Court’s decision that Maharaja Kumar Kamal Singh’s right to receive compensation under the Bihar Land Reforms Act should be valued at nil because of arrears of agricultural income‑tax. The central issue was whether such tax arrears could be deducted …

The respondent was assessed for wealth tax on Rs.6,07,690 including jewellery worth Rs.4,15,942 for AY 1969-70. The Appellate Assistant Commissioner (AAC) excluded the jewellery under s.5(1)(viii) of the Wealth Tax Act, 1957, and no appeal was filed, rendering the order final in the ordinary sense. After the Finance (N…

The appellant, a Hindu Undivided Family, reported a long‑term capital loss on the sale of its one‑fourth share in a property and relied on a valuation report prepared by a registered valuer. The Assessing Officer, after adopting a higher valuation by the District Valuation Officer, levied a penalty under Section 271(1)…

The case concerned gifts of immovable property made by a deceased individual to his wives in 1962, which were chargeable to gift‑tax. The assessee claimed that, under the proviso to section 4(1)(a) of the Wealth‑Tax Act, 1957, such gifts should be exempt from wealth‑tax assessment for all assessment years commencing af…

Rangi Lal and his son Chander Sen formed a Hindu undivided family (HUF) that later underwent a partial partition, after which Rangi Lal died leaving a credit balance in the firm’s books. Chander Sen, who had his own HUF with his sons, claimed that the balance and its interest were his individual inheritance and exclude…

The late Maharaja Vikramsinhji of Gondal created several foreign trusts in the United States and the United Kingdom. After his death, the Income Tax and Wealth Tax authorities assessed tax on the income of the UK trusts, arguing that they were specific trusts whose income accrued to the settlor and later to his son. Th…

The beneficiaries of the H.E.H. Nizam Jewellery Trust valued their interest in the trust's jewellery based on a valuer's report. The Commissioner of Wealth Tax challenged this valuation, arguing that the estate duty payable on the deemed death of the life tenant had been incorrectly deducted, among other objections. Th…

The Supreme Court examined the validity and mandatory nature of Rule 1‑D of the Wealth Tax Rules, which prescribes a break‑up formula for valuing unquoted equity shares of companies (excluding investment and managing‑agency companies). It held that the rule is a perfectly valid piece of delegated legislation and must b…

The appellants were a partnership firm (Juggi Lal Kamlapat Bankers) and a partner who was also the Karta of a Hindu Undivided Family (HUF). The HUF was assessed to wealth tax, and the assessment included the HUF's interest in the partnership firm. The Wealth‑Tax Officer, believing the book values of the firm’s building…

The Uttar Pradesh Police Recruitment and Promotion Board (UPPRPB) issued a 2021 notification for sub‑inspector recruitment requiring OBC candidates to submit a caste certificate in a specific state‑prescribed format. Mohit Kumar and Kiran Prajapati, both OBC candidates, submitted certificates in the Central Government …

The Deputy Commissioner of Gift Tax appealed against the valuation of shares gifted by M/s BPL Limited to M/s Celestial Finance Ltd. The shares, although listed, were promoter quota shares subject to a lock‑in period, raising the question of whether they were "quoted" for valuation purposes. The Supreme Court held that…

The appellants, partners in the firm G.D. & Sons, owned a cinema building (Alpana Cinema) that was assessed for wealth tax. The assessing officer referred the valuation to a Departmental Valuer under Section 16A of the Wealth Tax Act, 1957 and adopted the land‑and‑building (open‑market) method. The ITAT held that the i…

The case concerns the management of Sree Padmanabhaswamy Temple in Thiruvananthapuram, which has been historically managed by the Travancore royal family. After the integration of princely states, a Covenant in 1949 and the Travancore-Cochin Hindu Religious Institutions Act, 1950 preserved the Ruler's control over the …

Dr. Karan Singh, son of the former Maharaja of Jammu & Kashmir, claimed that 563 heirloom articles in the state Toshakhana were his private property. After a 1983 representation to the Ministry of Home Affairs was rejected, he filed a writ petition which was partially allowed by the High Court, declaring 42 items his. …

The respondent, a Hindu Undivided Family, was assessed wealth tax for the years 1965-66 to 1967-68, with the Wealth Tax Officer adding Rs. 1.5 lakh as accrued interest on its money‑lending business. The assessee argued that, because its books were kept on a cash basis, such accrued (but unrealised) interest could not b…

The appellants were liable to penalty under Section 18(1) of the Wealth Tax Act, 1957 for failing to file wealth‑tax returns for assessment years 1970‑71 to 1975‑76. After the amendment inserting Section 18‑B, they filed the returns and sought a full waiver of the penalty. The Commissioner, satisfied that the condition…

Prince Muffakham Jah, a beneficiary of a trust created by the late Nizam, was entitled to reside rent‑free for life in a house built by the trustees. He omitted the value of this life interest from his wealth‑tax returns for assessment years 1969‑70 to 1977‑78. The Wealth‑Tax Officer added the value using Rule 1B of th…

R.K. Deo, the former Raja of Jeypore, claimed a deduction of Rs 6,69,766, the income‑tax liability on his forest income, while computing his net wealth under the Wealth Tax Act, 1957 for the assessment years 1962‑63 to 1965‑66. The liability had been affirmed by the Supreme Court in 1958, a fresh demand notice was issu…

The respondent, a beneficiary of a trust, received income from a partnership firm which was assigned to the trust and later distributed. The beneficiaries, including the respondent, assigned their interests to a Body of Individuals (B.O.I.) and claimed that the assets should be valued as belonging to the B.O.I. The Ass…

The appellant, Commissioner of Wealth Tax, challenged the assessee P. K. Banerjee's claim that his right to receive the net income of a family trust fund was an annuity exempt under section 2(e)(iv) of the Wealth Tax Act, 1957. The trust, created by Banerjee's father in 1937 and modified in 1950, paid the net income of…

The Commissioner of Wealth Tax assessed the wealth tax on the entire value of assets held in three discretionary trusts created for the benefit of Arvind Narottam, invoking s.21(2) of the Wealth Tax Act, 1957. The trusts stipulated only a minimum annual payment to the beneficiary, with any surplus income and the corpus…

The Supreme Court examined whether the tax authorities could choose to assess tax on either the trustees or the beneficiaries of a discretionary trust when the trust's income was distributed and actually received by the beneficiaries during the accounting year. The respondent, a beneficiary of six discretionary trusts,…

The case concerned a Rs.4,00,000 loan advanced by the assessee to his partner in a flour and oil mill partnership, which the assessee claimed was a 'Quaraza-e-Hasana'—an interest‑free goodwill loan under Muslim law—and therefore should be excluded from his wealth for tax purposes. The Wealth‑Tax Officer and the Appella…

A.V. Reddy created four trusts for his grandchildren and daughter, appointing himself as sole trustee. The trusts stipulated that the corpus would be transferred to beneficiaries only after they attained a specified age, making their interests contingent and indeterminate at the valuation dates. The Wealth Tax Officer …

The assessees purchased deferred annuity policies and claimed exemption from wealth tax under section 5(1)(vi) of the Wealth Tax Act, 1957, arguing that such policies fell within the phrase "any policy of insurance". The Wealth Tax Officer rejected the claim, but the Appellate Assistant Commissioner, the Income Tax App…

The Bangalore Club, a social club, challenged an assessment that it was liable to wealth tax under Section 21AA of the Wealth Tax Act, 1957. The Assessing Officer and the CIT (Appeals) held the club liable, but the Appellate Tribunal set aside those orders. The Supreme Court examined the meaning of "association of pers…

The assessee, a charitable trust created in 1942, amended its deed in 1971 to require that surplus funds be invested in a company in which the trustees had a substantial interest. It claimed exemption of the interest earned on those investments under Section 11 of the Income Tax Act, relying on the first proviso to Sec…

Sm. Amiya Bala Paul constructed a house and disclosed investment amounts in the assessment years 1982-83 and 1983-84. The Assessing Officer rejected the second disclosure and, invoking Section 55A of the Income Tax Act, referred the valuation of the house's construction cost to a Valuation Officer appointed under the W…

The case concerned whether a Mapilla Marumakkathayam Tarawad, a Muslim undivided family governed by the Marumakkathayam Act, fell within the meaning of "individual" under section 3 of the Wealth Tax Act, 1957 and could therefore be taxed. The deceased Karnavan of such a Tarawad had been assessed to wealth tax, which he…

The assessee, Ahmed Ibrahim Sahigra Dhoraji, possessed concealed income of Rs 7 lakhs earned between 1957‑58 and 1964‑65. He made a voluntary disclosure under Section 68 of the Finance Act 1965 and paid tax at the prescribed rate. He claimed that the tax paid could be deducted as a "debt owed" under Section 2(m) of the…

The Commissioner of Wealth Tax, Amritsar appealed against a High Court order that had ruled in favour of Suresh Seth, who had filed his wealth‑tax returns for 1964‑65 and 1965‑66 years several years late. The department had levied penalties under section 18(1)(a) of the Wealth Tax Act, applying different rates for peri…

The Commissioner of Wealth Tax assessed wealth tax on Smt. Anjamli Khan for three assessment years, estimating compensation payable for agricultural lands acquired by the State under the West Bengal Estates Acquisition Act, 1953. Khan contended that the right to receive such compensation was not an "asset" under Sectio…

Maharao Bhim Singh, the ruler of the former princely State of Kota, owned the Umed Bhawan residential palace, part of which was requisitioned and let out to the Ministry of Defence, generating rent. The issue before the Supreme Court was whether the exemption under Section 10(19A) of the Income‑Tax Act, 1961 and Paragr…

Maharaja Amrinder Singh, a wealth‑tax assessee, challenged the High Court’s order that set aside the Income Tax Appellate Tribunal’s decision in his favour and restored a penalty assessment for the years 1981‑84. The revenue had appealed to the High Court under Section 27‑A of the Wealth Tax Act, 1957, which the Suprem…

The Supreme Court examined whether a company, being a juristic person, can be prosecuted under Section 56 of the Foreign Exchange Regulation Act, 1973 when the statute mandates both imprisonment and fine. The appellants argued that because a company cannot be imprisoned, the provision could not apply to them. The Court…

The Supreme Court examined two appeals challenging notices issued by the Assistant Controller of Estate Duty under sections 59(a) and 61 of the Estate Duty Act, 1953, which sought to reopen and rectify estate duty assessments of lands acquired by the government. The Court held that the right to receive compensation for…

The appellants, a Hindu Undivided Family (HUF) of four members, filed a suit for partition in 1954, with a final decree in 1961. The Wealth Tax Officer assessed the family for assessment years 1958-59, 1959-60 and 1960-61, treating it as an undivided family of four members because no physical partition by metes and bou…

Sh. Mohammad Ali Khan owned the Khas Bagh Palace, which the Central Government declared as his official residence under the Merged States (Taxation Concessions) Order, 1949. He claimed exemption from wealth tax for the entire palace under Section 5(1)(iii) of the Wealth Tax Act, 1957, arguing that the provision covered…

The respondents filed writ petitions challenging the extension of the Wealth Tax Act, 1957 to the State of Jammu & Kashmir, arguing that the Act falls under Union List Entry 86, which does not apply to the State under Article 370, and that it should be placed under Entry 97, rendering the extension ultra vires. The Hig…

The appellant, Commissioner of Wealth Tax, challenged the High Court's order that allowed a deduction of a Rs 30 lakh decree amount as a debt owed by the assessee, Raja Vishwanath Pratap Singh, under the Wealth Tax Act. The decree arose from his father's debts under the U.P. Encumbered Estates Act; the father's estate …

Dr. R.S. Gupta claimed that two sums (Rs.1,50,000 and Rs.67,560½) were valid gifts to his sons and grandsons, effected by instructing a non‑banking firm (Messrs Tika Ram & Sons) to debit his account and credit the donees' accounts. The firm had only Rs.4,000 cash and no overdraft facility. The Revenue argued that witho…

F.S. Gandhi, the deceased, owned several lease‑hold properties in Allahabad. The leases expired in 1958 and 1963 and the Government of Uttar Pradesh served notices to vacate, but the assessee continued to occupy the premises under a month‑to‑month tenancy and collected rent. The Wealth Tax Officer, the Appellate Assist…

The appellants, H.H. Lakshmi Bai and others, invested Rs.70,000 in National Defence Certificates and Defence Deposit Certificates, which fall under clause (xv) of section 5(1) of the Wealth Tax Act, 1957. They already enjoyed the general exemption of Rs.150,000 under section 5(1) and claimed an additional exemption und…

The respondent‑assessee, Shatrusail Ya Digvijay Singh Jadeja, had tax assessments for years 1984‑85 to 1991‑92 under the Income Tax Act and the Wealth Tax Act, which were appealed but dismissed in 1992‑93 for failure to pre‑deposit tax. After the Finance (No.2) Act, 1998 introduced the Kar Vivad Samadhan Scheme (effect…

The Supreme Court examined whether the Petroleum and Natural Gas Regulatory Board (PNGRB) could, under the PNGRB Act, 2008, fix the maximum retail price of gas and determine network tariff and compression charges for a city or local natural gas distribution network owned by Indraprastha Gas Ltd. The Court held that Sec…