1370. Exemption of units under section 32(1)(ba) of Unit Trust of India Act - Whether over and above and independent of exemption under clause (xxv) of sub-section (1)
Circular No. 323 was issued by the Central Board of Direct Taxes on 22 January 1982. Its subject is 1370. Exemption of units under section 32(1)(ba) of Unit Trust of India Act - Whether over and above and independent of exemption under clause (xxv) of sub-section (1).
This grants an exemption or a relief under a provision that allows one. Read the conditions attached: an exemption notification is construed strictly, and a condition missed is the exemption lost.
Holds the Unit Trust exemption to be additional to the wealth-tax exemption for units. Under section 5(1)(xxv) of the Wealth-tax Act the exemption is subject to the Rs. 1,50,000 aggregate limit in section 5(1A) for the listed investments and to the condition in section 5(3)(b) that the asset be owned for at least six months ending with the valuation date. Section 32(1)(ba) of the Unit Trust of India Act, as amended by the Trust Laws (Amendment) Act, 1975 and the Unit Trust of India (Amendment) Act, 1976, provides that notwithstanding anything in the Wealth-tax Act, an individual or Hindu undivided family resident in India shall not pay wealth-tax on, and shall not include in net wealth, units of value not exceeding Rs. 25,000. That exemption is therefore not subject to section 5(1A) or section 5(3)(b), and the Board clarifies that it is over and above and independent of the exemption under section 5(1)(xxv) read with those sub-sections.
A doubt had been raised in certain quarters about the extent to which units of the Unit Trust of India are exempt in a wealth-tax assessment.
1370. Exemption of units under section 32(1)(ba) of Unit Trust of India Act - Whether over and above and independent of exemption under clause (xxv) of sub-section (1)
1. A doubt has been raised in certain quarters as to the extent to which units of the Unit Trust of India are exempt for the purpose of wealth-tax assessment.
2. The exemption under clause (xxv) of sub-section (1) of section 5 is available subject to the limit of Rs. 1,50,000 laid down under sub-section (1A) of section 5 for the listed investments and also subject to the condition that the asset should have been owned by the assessee for a period of at least six months ending with the relevant valuation date as laid down in clause (b) of sub-section (3) of section 5.
3. The Unit Trust of India Act, as amended by the Trust Laws (Amendment) Act, 1975 and the Unit Trust of India (Amendment) Act, 1976 provides in clause (ba) of sub-section (1) of section 32 that notwithstanding anything contained in the Wealth-tax Act, wealth-tax will not be payable by an assessee, being an individual or a Hindu undivided family who is resident in India, in respect of, and there shall not be included in the net wealth of the assessee, units of the value not exceeding Rs. 25,000. Thus, the exemption under the aforesaid provision is not subject to the limitation and restriction provided under section 5(1A) or 5(3)(b).
4. In view of the position stated above, it is clarified that the exemption under section 32(1)(ba ) of the Unit Trust of India Act, will be over and above and independent of the exemption provided under section 5(1)(xxv) read with sections 5(1A) and 5(3)(b).
Circular : No. 323 [F. No. 317/39/80-WT], dated 22-1-1982.
In a wealth-tax assessment where the exemption on unit holdings is restricted by applying the section 5(1A) ceiling to them.
An individual whose other listed investments already use up the Rs. 1,50,000 limit under section 5(1A) also holds Unit Trust units worth Rs. 25,000, bought two months before the valuation date. Those units still stay out of net wealth under section 32(1)(ba), neither the aggregate limit nor the six-month holding requirement applying to them.
Source: the Income Tax Department’s own published text — its page for this instrument.