1998 (2) TMI 14 - HC - Wealth-tax

Wealth Tax, Exemption, Representative Assessee, Minor, Appeal To Appellate Tribunal, Powers Of Tribunal

Summary

Issues:
- Entitlement to exemption under section 5(1)(xxxi) of the Wealth-tax Act
- Jurisdiction of the Appellate Tribunal to entertain a new plea raised by the assessee

Entitlement to Exemption under Section 5(1)(xxxi) of the Wealth-tax Act:
The case involved a minor assessee whose wealth-tax assessment was made on his father and natural guardian in a representative capacity. Initially, the Wealth-tax Officer denied exemption claimed under section 5(1)(xxxii) of the Act, stating the minor was not a partner of the firm. However, the Appellate Assistant Commissioner held that the minor was entitled to exemption under section 5(1)(xxxii) read with section 5(1A) of the Act due to the assets being held by the trustee in a representative capacity. The Income-tax Appellate Tribunal upheld this view, stating that the beneficiary's right to exemption would be the same as that of the trustee, regardless of the assessment being on the trustee or directly on the beneficiary. The Tribunal later clarified that the exemption claimed was under section 5(1)(xxxi) of the Act, as the assessee was a beneficiary. The High Court, considering the provisions of section 21 of the Wealth-tax Act, held that since the assets were held for the benefit of the beneficiary, the exemption should be granted to the beneficiary, even if not the legal owner of the trust property.

Jurisdiction of the Appellate Tribunal to Entertain a New Plea:
Regarding the jurisdiction of the Appellate Tribunal to entertain a new plea raised by the assessee for exemption under section 5(1)(xxxi) which was not made before the lower authority, the High Court referred to a Supreme Court decision stating that the Tribunal has the discretion to allow or disallow a new ground to be raised. In this case, the Tribunal properly exercised its discretion in considering the new plea raised by the assessee, as the contents of exemption under sections 5(1)(xxxi) and 5(1)(xxxii) were the same. The High Court found no issue with the Tribunal's decision to entertain the new ground raised by the assessee and upheld the Tribunal's order in favor of the assessee, granting exemption under section 5(1)(xxxi) of the Wealth-tax Act.

In conclusion, the High Court ruled in favor of the assessee, holding that the assessee was entitled to exemption under section 5(1)(xxxi) of the Wealth-tax Act. The Court also affirmed the jurisdiction of the Appellate Tribunal to entertain the new plea raised by the assessee, as it was within the Tribunal's discretion to allow such grounds to be raised.