( 1 ) AT the instance of the assessee, the following question of law, arising out of the order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench c, has been referred to this court for its opinion under the provisions of sec. 27 (1) of the Wealth-tax Act, 1957 (hereinafter referred to as the Act) : "whether, on the facts and in the circumstances of the case, the assessee was entitled to the exemption u/s 5 (1) (xvia) in respect of the National Defence Gold Bonds, 1980?"

( 2 ) THE facts giving rise to the reference, in a nutshell, are as under :

( 3 ) IN 1965, a declaration was made by the Union of India to the effect that the country wanted to strengthen its defence forces against possible aggression by enemy countries and, therefore, the country needed arms and armaments and machines that would make arms and armaments so that the country can become self-sufficient in the matter of its defence. The country required machinery and raw material for the industries to support the peoples efforts. The country required fertilizers and farm equipments to grow more food so as to see that dependence on foreign countries is reduced. For all these purposes, the country was not having sufficient gold and, therefore, an appeal was made to the citizens that idle gold, which the people of the country were having, should be handed over to the country so that the need for valuable gold to earn foreign exchange for the country can be satisfied.

( 4 ) LOOKING to the said need of the country, in 1965, the Union of India had issued the National Defence Gold Bonds, 1980 (for short "gold Bond" ). The said Gold Bonds were to be issued in exchange of gold, gold coins and gold ornaments by the Government. All the gold, which the Government was to receive from the citizens, was to be returned to them after 15 years. Thus, under the said scheme, a citizen had to give his gold, gold coins or gold ornaments to the country and in exchange thereof the citizen was to be issued the Gold Bond. The said scheme was open till 31. 1. 1966 i. e. till that date it was open to the citizen to give his gold, gold coins or gold ornaments to the country and in exchange thereof he was to get the Gold Bond. The said bonds were to be again exchanged for gold after 15 years. The date of maturity, which was declared at the relevant time, was 27. 10. 1980. Thus, the Government had promised the citizens that in return of the Gold Bond the Union of India would return the gold so received from the citizens on 27. 10. 1980. It is also pertinent to note that there were certain characteristics of the said Gold Bond. Special incentives were given to the citizens so that they may surrender their idle gold to the country. The Government had declared that no questions would be asked to the citizen as to how he acquired the gold and no action was to be taken against him in pursuance of the Gold Control Act or any other regulations in respect of the gold given. The gold, which was to be given to the country, was to be sent to a mint and was to be refined to the tune of 23. 88 ct. and the Government was to issue the Gold Bond stating the quantity of gold received by the Government.

( 5 ) IT was also decided that a sum of Rs. 2/- per 10 gms. of refined gold would be paid to the bearer of the Gold Bond every year. Thus, return of Rs. 2/- per 10 gms of gold was also assured to the bearer of the Gold Bond. In addition to the above attraction, it was also declared that the first subscriber of the Gold Bond would be exempted in respect of Gift Tax, Estate Duty and Wealth Tax. No gift tax was to be paid by the first subscriber in respect of gift of the Gold Bond upto 5000 gms. of gold in one year and the Gold Bond was also exempted from payment of estate duty on the occasion of death of the initial subscriber of the bond. The Ministry of Finance had issued a notification dated 19. 10. 1965 giving details with regard to the above Gold Bond. In clause (5) of the said notificati