Circular No. 385

1338. Whether properties left in erstwhile East Pakistan after Indo-Pak conflict of 1965 and relief granted in the form of ex gratia grant and as such asset includible in net wealth

What this is

Circular No. 385 was issued by the Central Board of Direct Taxes on 3 July 1984. Its subject is 1338. Whether properties left in erstwhile East Pakistan after Indo-Pak conflict of 1965 and relief granted in the form of ex gratia grant and as such asset includible in net wealth.

What it does

Settles two points on the wealth-tax treatment of persons who migrated to India leaving property in erstwhile East Pakistan after the Indo-Pak conflict of 1965. The value of property left behind, which vested in the Custodian of Enemy Property in Pakistan, cannot be assessed to wealth-tax in India in the hands of such persons. The ad hoc interim relief given by the Government of India as an ex gratia grant from the Consolidated Fund of India also cannot be assessed to wealth-tax, there being no legally enforceable claim to such relief.

Why it was issued

The Board considered how such assessees were to be taxed under the Wealth-tax Act on the properties they had left behind and on the relief granted to them.

Who it reaches

Persons who migrated to India from erstwhile East Pakistan after the 1965 conflict
Recipients of ex gratia grants on that account
Wealth-tax Officers assessing such persons

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

1338. Whether properties left in erstwhile East Pakistan after Indo-Pak conflict of 1965 and relief granted in the form of ex gratia grant and as such asset includible in net wealth
The Board have considered taxation under the Wealth-tax Act of assessees in India 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 in the form of ex gratia grant from the Consolidated Fund of India and have decided as under :
The value of the properties left behind in East Pakistan by persons who had migrated to India, and which vested in the Custodian of Enemy Property in Pakistan, cannot be assessed to wealth-tax in India in the hands of such persons.
The ad hoc interim relief granted by the Government of India in the form of ex gratia grant from the Consolidated Fund of India cannot be assessed to wealth-tax as there is no legally enforceable claim to such relief.
Circular : No. 385 [F.No. 316/35/81-WT], dated 3-7-1984.

What to watch

This is a Wealth-tax Act circular, not an income-tax one.
The second limb of the concession, on the ex gratia grant, was withdrawn by Circular No. 547, dated 18-10-1989, which deleted that item as being contrary to section 2(e); the first limb, on the property vested in the Custodian, is not touched by that withdrawal.
The property limb depends on the property having vested in the Custodian of Enemy Property in Pakistan.
The Wealth-tax Act has since been recast in terms this text does not carry.

Where you meet it

In a wealth-tax assessment of a migrant assessee where the abandoned property or the ex gratia grant is sought to be included in net wealth.

← Circular No. 384 · Circular No. 383 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.