COMMISSIONER OF WEALTH TAX VS. SHRI J. K. SRIVASTAVA

PRAKASH KRISHNA, J.

( 1 ) THESE are three Wealth Tax References under Section 27 of the Wealth Tax Act (here-in-after referred to as the Act ). The following identical question of law has been referred by the Income tax Appellate Tribunal on the direction of this Court for various assessment years for opinion of this Court:

"whether in the facts and circumstances of the case the Appellate Tribunal was in error in holding that the assessee was not liable to Wealth Tax on the value of interest in the association of persons?"

( 2 ) IN W. T. R. No. 193 of 1985 the assessment years 1969-70 to 1976-77 are involved The assessment year 1967-68 is involved in WTR No. 194 of 1985. The assessment years 1974-75 and 1975-76 are involved in WTR No. 2 of 1986:

( 3 ) SINCE common question of law is involved in respect for different assessment years, all these matters were heard together and are being disposed of by a common judgment.

( 4 ) THE facts giving rise to the present references are that the respondent. J. K. Srivastava, herein after referred as assessee was assessed as an individual during assessment years in question. Sri j. P. Srivastava, father of the assessee made gifts of Rs. 1,38,933/- Rs. 1,09,798/- and Rs. 35/during his lifetime to the assessee Jointly with his son Sri V. K. Srivastava. These amounts were invested and the income arising out of these amounts was held by the Appellate Assistant commissioner (Appeals) for the assessment years 1954-55 and 1956- 57 belonged to the association of person where the share of the members being indeterminate and therefore, liable to tax at the maximum rate and for the subsequent assessment year both according to Income Tax return and the Income Tax assessment, the income from this source was assessed the in the status of association of person, where share of members of association of person were not determinate. The Wealth Tax Officer in the Wealth Tax assessment proceeding included half wealth of the a. O. P. in the hands of the assessee. The addition of half share of the value of assets belonging to the association of persons was deleted in appeal by the Appellate Assistant Commissioner in appeal filed by the department. The Tribunal has confirmed the order of the Appellate Assistant commissioner in appeal filed by the department.

( 5 ) HEARD Sri A. N. Mahajan, learned Standing Counsel for the revenue and Sri S. D. Singh learned counsel for the assessee.

( 6 ) LEARNED counsel for the revenue submitted that the gifts of certain amounts were made by the father of the assessee during his life time to the assessee and his son jointly. There were only two persons and, as such, number of persons was fixed and determinate. The total assets of these two persons who have been termed as "association of persons" was also fixed and determinate. Under the common law if the gift has been made to two persons in absence of any contrary intention by the donor, it shall be presumed that the donees have got equal share in the gifted property. The Wealth Tax Officer was, thus justified, in adding half value of the gifted assets belonging to the assessee and half to his son, at the hands of the assessee and rightly charged wealth tax there on.

( 7 ) IN contra, learned counsel for the assessee submitted that under Wealth Tax Act only three entities are recognized for the purposes of charging wealth tax namely "individual", "hindu undivided family" and "company", vide Section-3 of the Act. The assets in question belonged to the association of persons, cannot be charged at the hands of the assessee for Wealth tax purposes.

( 8 ) SECTION-3 of the Act is the charging section. It provides that wealth tax in respect of net wealth on the corresponding valuation date of every individual, Hindu undivided family and the company shall be charged for every assessment year, at the rate or rates specified in Schedule-I of the Act. It is established that association of pe

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