1343. Wealth-tax assessment in respect of property left in erstwhile East Pakistan after Indo-Pak conflict of 1965
1. Attention is invited to the Board’s Circular No. 385C dated 3-7-1984 laying down the procedure regarding taxation under the W.T. Act of assessees in respect of their properties left in erstwhile East Pakistan after Indo-Pak conflict of 1965 and the relief granted to them in respect of such properties.
2. Audit has pointed out that according to item (ii) of the circular the ex gratia grant received by the assessees before the valuation date need not be brought to tax in the assessment relevant to the valuation date. This instruction runs counter to section 2(e) of the Wealth-tax Act which provides that “asset” includes property of every description. Cash received before the valuation date would necessarily form part of regular wealth and will be liable to tax in any case.
3. The matter was considered in tripartite meeting in the Ministry of Law. The Ministry of Law has opined that the mere fact that a person has no right to claim a sum does not alter its nature after it has been received. No doubt, ex gratia payment is a payment made voluntarily by the Government. Nevertheless, once it is received by an assessee, it becomes asset in his hands and is, therefore, liable to wealth-tax.
4. The above circular is, therefore, modified to the extent that item (ii) stands deleted.
Circular : No. 547, dated 18-10-1989
