The document summarizes key aspects of the Wealth Tax Act of 1957 in India, including who is chargeable for wealth tax, how net wealth is computed, valuation rules, and assessment procedures. It outlines what constitutes an "asset" and "net wealth" under the Act. It also describes various deemed assets that get included in a person's net wealth, such as assets transferred to a spouse or minor child. Exceptions to certain assets like residential houses are also provided.

1. Wealth-tax Act, 1957
(a) Chargeability
(b) Computation of Net Wealth
(c) Valuation Rules
(d) Assessment Procedures, Appeals, etc.

2. Chargeability
The following persons are liable to Wealth-tax -
Individuals
H.U.F.s
Companies other than S. 25
companies.

3. Chargeability
Assessment Year – S. 2(d)- 2013-14
Valuation Date - S. 2(a) – 31.03.2013
Valuation Date instead of Previous Year
Wealth to be computed as on the last moment
of the Valuation Date.

4. • India S.2(ka)-
• India means the territory of India as referred to in
Article 1 of the Constitution, its territorial waters,
seabed and subsoil underlying such waters,
continental shelf, exclusive economic zone or any
other maritime zone as referred to in the
Territorial Waters, Continental Shelf, Exclusive
Economic Zone and other Maritime Zone Act,
1976, and the air space above its territory and
territorial waters.

5. What is Net Wealth? S. 2(m) –
Assets [S. 2(ea)] xxx
Deemed Assets u/s. 4 xxx
----
xxx
Less : Exempt Assets u/s. 5 xxx
----
xxx
Less : Debts in relation to assets
which are not exempt xxx
----
Net Wealth xxx

6. Incidence of tax S. 6
Net Wealth –
(A)Assets located in India x
Less : Debts in relation to assets
located in India y
(B) Assets located outside India a
Less : Debts in relation to assets
located outside India b

7. Incidence of Tax
Individuals :
R. & O.R. and Citizen of India (x-y)+(a-b)
R. & O.R. but not Citizen of India x-y
R. but N.O.R. (whether or not
Citizen of India) x-y
Non-Resident (whether or not
Citizen of India) x-y

8. Incidence of tax
H.U.F.
R. & O.R. (x-y) + (a-b)
R. but N.O.R. x-y
Non-Resident x-y
Company
Resident (x-y) + (a-b)
Non-Resident x-y

9. • Some Decisions-
• (1) Law in force on the first day of the Assessment
Year is applicable.
• Pramod Kumar Jain v. CWT 58 ITR 161 (Bom)
• (2) Method of Accounting is not relevant under
the Wealth tax Act.
• Dipit Kumar Basu v. CWT 105 ITR 450 (Cal)
• (3) A Hindu deity is an individual
• CWT v. B.C. Gupta & Sons Ltd.182 ITR 240
(Gau)

10. • (4) Property of father who dies inestate, devolves
on his son in his individual capacity u/s.8 of the
Hindu Succession Act and does not constitute
assets of the son’s H.U.F..
• CWT v. Chander Sen 161 ITR 370 (SC)
• (5) Widow and minor daughter cannot constitute
HUF in respect of property devolving on
husband’s death.
• Rukmani Bai Rathor v. CWT 54 ITR 430 (Ori.)

11. Assets S.2(ea)-
Six categories of assets fall within the ambit
of Wealth-tax –
(1) Guest House, Residential House or
Commercial Building S. 2(ea)(i)
(a) Any building used for commercial or
residential purpose or as guest house or
land attached to such building.

12. Assets S.2(ea) – (contd.)
(b) A farm house situated within 25 kms. from
the local limits of a municipality or a
cantonment board.

13. Assets -
However, the following buildings are not regarded
as assets –
(i) A residential house, if the following conditions
are satisfied –
(a) it is meant exclusively for residential purposes.
(b) it is allotted by a company to an employee or
officer or a director in whole-time employment.

14. Assets – (contd.)
(c) The gross annual salary of such person is
less than Rs. 5,00,000 – Gross Annual
Salary not defined – It would include
salary, bonus, commission and all taxable or
exempt allowances excluding perquisites.

15. Assets – (contd.)
( ii) A house held as stock in trade
(iii) A house used for own business or profession.
It is not necessary to use the house throughout the P.Y.. It
is enough if it is earmarked for use for business purpose.
Some Decisions-
(1) If a place is used for conducting meetings, it can be
treated as property used for business.
Tracstar Investment P. Ltd. v. CWT 1 SOT 117(Mum).

16. (2) If property owned by an individual is used for the
business of the firm in which he is a partner, it is deemed
to have been used by him for the purpose of his business.
CIT v. K.M. Jagannathan 180 ITR 191(Mad.)
Contrary view-CIT v. K.N.Guruswamy 146 ITR 34 (Kar.)
(3) A residential house used for business purposes is not
covered by this exception as a residential house is covered
by the specific provision of S.2(ea)(i)(1). S.2(ea)(i)(3)
applies to a house other than a residential house used for
business purposes.
• Floatglass India Ltd. V. CWT 89 ITD 542 (Mum)

17. (iv) A residential property let out for atleast 300 days in the
Previous Year.
(v) A commercial complex
2. Motor Car S. 2(ea)(ii) –
Any motor car other than a motor car used in the business of
running it on hire or held as stock in trade.
3. Jewellery, bullion, utensils of gold, silver, etc. other than
those held as stock in trade. S. 2(ea)(iii).
Gold Deposit Bonds issued under the Gold Deposit Scheme,
1999 by the Central Govt. – not assets.
Assets – (contd.)

18. Assets – (contd.)
4. Yachts, boats and aircrafts other than those
used for commercial purposes S. 2(ea)(iv).
Some Judgements –
It is not necessary that the aircraft should be used
as air taxi to satisfy the test of commercial
purpose.
Amalgamated Electricity Co. Ltd. v. State of
Rajasthan AIR 1983 Raj. 154.

19. Assets – (contd.)
Use of helicopter or air craft for the purpose
of an assessee’s business is use for
commercial purpose.
Garware Wall Ropes Ltd. v. C.I.T. 89 ITD
221 (Mum.)

20. (5) Urban Land S.2(ea)(v)-
• Land situated within the local limits of a
municipality having a population of not less
than 10,000.
• Land situated within 8 kms. from the local
limits of any municipality as the Central
Government may specify.

21. Exceptions (Urban Land not
treated as asset)
(1) Land on which construction of a building is
not permissible under any law in the area in
which such land is situated.
(2) Land on which building has been constructed
with the approval of the appropriate authority.

22. Exceptions (Urban Land not
treated as asset) (contd.)
(3) Any unused land held by the assessee for
industrial purposes for a period of two years
from the date of its acquisition by him.
(4) Any land held by the assessee as stock in trade
for a period of 10 years from the date of its
acquisition by him.

23. Judgement –
Once construction starts on urban land, it
looses its character of urban land and will not
fall within the meaning of ‘asset’.
Mathew L. Chakola v. CWT 9 SOT 617
(Cochin).

24. (6) Cash in Hand S.2(ea)(vi)-
In the case of an individual or H.U.F., cash in
hand on the last moment of the valuation date in
excess of Rs. 50,000.
In the case of a company, any amount not recorded
in books of account.
The above assets must be owned by the assessee
for being included in his/its Net Wealth.

25. Deemed Assets S. 4 -
(1) Assets transferred by an individual to
his/her spouse S.4(1)(a)(i) –
If an asset is transferred by an individual after
31st
March, 1956 to his/her spouse directly or
indirectly, otherwise than for adequate
consideration or in connection with an
agreement to live apart, the asset shall be
included in the net wealth of the transferor.

26. If the following two conditions are satisfied, the
asset so transferred shall not be included in the
net wealth of the transferor –
(a) The asset was transferred to spouse during
the accounting year relevant to gift tax A.Y.s
1964-65 to 1971-72.
(b) The assets transferred were chargeable to
Gift tax or was exempt from Gift tax u/s. 5 of
the Gift-tax Act.

27. Some Judgements -
(a) Adequacy of consideration should be
measurable with money or money’s worth.
CWT v. Khan Saheb Dost Mohd. Alladin 91
ITR 179 (A.P.)
(b) Husband-wife relationship should subsist both
on the date of transfer and on valuation date.
CWT v. Khan Saheb Dost Mohd. Alladin 91
ITR 179 (A.P.)

28. Some Judgements (contd.)
(c) Where husband gifted money to his wife who
acquired a house with the gifted money, value of
the house on the Valuation Date shall be
included in the wealth of the husband.
Vaidya Subramaniam v. CWT 108 ITR 538
(Mad.)
CWT v. Kishan Lal Bubna 204 ITR 600 (SC)

29. Some Judgements (contd.)
(d) If property transferred to spouse is an asset
on the Valuation Date although it was not
an asset on the date of transfer, such asset
shall be included in the wealth of the
transferor.
M. G. Kallakulam v. C.I.T. 115 ITR 16
(Ker.)

30. Some Judgements (contd.)
(e) If an intimate connection is established
between the two transactions, they will fall
within S.4, even though they may be prima
facie separate transactions, e.g. cross gifts.
S. C. Vashnet v. CWT 1976 TLR 261 (Pat.)

31. Some Judgements (contd.)
(f) Accretions to the assets transferred do not
fall within the scope of S.4.
CWT v. T. Saraswathi Achi 4 Taxman 356
(Mad.)

32. (2)Assets held by a minor child
S.4(1)(a)(ii) -
Value of assets held by a minor child (including
step/adopted child) other than a married
daughter on the Valuation Date shall be
included in the net wealth of the parent whose
net wealth excluding the assets of the minor
child is greater.

33. If the marriage of parents does not ‘subsist’, net
wealth of the minor child to be included in the net
wealth of the parent who maintains the child
during the P. Y.
Once such assets included in the Net Wealth of a
parent, such assets not to be included in the Net
Wealth of the other parent unless the Assessing
Officer is satisfied that it is necessary to do so.
That parent shall be given opportunity of being
heard.

34. Exceptions :
Net Wealth of minor not to be clubbed in the
following cases –
(a) Assets acquired by the minor out of
(i) income earned on account of manual work
done by him and

35. (ii) from any activity involving application
of his skill, talent or specialised knowledge
and experience.
(b) assets of a minor child suffering from any
disability specified in S. 80U.
Clubbing provisions not to apply, if the
minor has become major on the Valuation
Date.

36. (3)Assets transferred to a person or an
A.O.P. S. 4(1)(a)(iii) -
Where an asset is transferred by an individual to
any person or an A.O.P. after 31st
March,’56 for
the immediate or deferred benefit by himself or
spouse for inadequate consideration, it shall be
included in the net wealth of the transferor.
Exception –
Exception in the case of an individual u/s.4(1)(a)
(i)
applied u/s. 4(1)(a)(iii).

37. (4) Assets transferred under Revocable
Transfers S. 4(1)(a)(iv)-
Any asset transferred under a revocable transfer after
31st
March, 1956 by an individual to a person or an
A.O.P. shall be included in the Net Wealth of the
transferor.
Revocable Transfer –
(a) If the transfer is revocable within 6 years or during
the lifetime of the beneficiary or

38. (b) if the transferor derives any benefit,
directly or indirectly, from the transferred
asset, or
(c) if the transferor has a right to retransfer,
directly or indirectly, the whole or any part
of the assets or income from the assets so
transferred or

39. (d) If the transferor has the right to reassume
power, directly or indirectly, over the
whole or any part of the asset or the income
arising from the asset.
Exceptions –
Exception u/s. 4(1)(a)(i) apply.

40. (5) Assets transferred to son’s wife S. 4(1)
(a)(v) -
Any asset transferred by an individual after
31st
May, 1973, directly or indirectly, to
his/her son’s wife without adequate
consideration shall be included in the Net
Wealth of the transferor.

41. (6) Assets transferred for the benefit of
son’s wife S. 4(1)(a)(vi) -
Any asset transferred by an individual after
31st
May, 1973, directly or indirectly, to a
person or an A.O.P. for the immediate or
deferred benefit of son’s wife shall be
included in the Net Wealth of the transferor.

42. (7) Interest of Partner – S. 4(1)(b) -
The value of interest of a partner or a member of
a firm or A.O.P. shall be included in the Net
Wealth of the partner or member.
Interest to be determined as per Schedule – III
to the Wealth-tax Act.
Interest of a minor pertner to be included in the
Net Wealth of the parent as per S. 4(1)(a)(ii).

43. (8) Conversion of self acquired property
into joint family property – S.4(1A) -
If a member of H.U.F. impresses his property
with the character of a property belonging to the
family or throws it into common stock of the
family after 31st
December, 1969, the value of
the property shall be included in the Net Wealth
of the member.
After partition of H.U.F., that part of such
property received by the spouse of the transferor
shall be included in his Net Wealth.

44. (9) Gifts by book entries S. 4(5A) -
Asset gifted by book entry shall be included
in the Net Wealth of the transferor unless he
proves to the satisfaction of the W.T.O. that
the money had actually been delivered to
the donee at the time, the entries were
made.

45. (10) Impartible Estate S. 4(6) –
Holder of impartible estate shall be deemed
to be the owner of all the properties in the
estate.

46. (11) Property held by a member of a
housing society S. 4(7) -
A member of a co-op. society who is
allotted a building or part thereof shall be
deemed to be the owner of such building.

47. (12) Property held in part performance of a
contract S. 4(8) -
A person who is allowed to take possession of
an immovable property in part performance of a
contract referred to in S. 53A of the Transfer of
Property Act shall be deemed to be the owner
of the property.