1990 (6) TMI 22 - HC - Wealth-tax

Issues Involved:

1. Inclusion of the entire value of the trust property in the net wealth of the trustees.
2. Determination of the part of the trust property liable to be assessed in the hands of the trustees and the assessee.
3. Validity of the reassessment of the trustees based on the Appellate Assistant Commissioner's order as "information" under section 17(1)(b) of the Wealth-tax Act.
4. Validity of the reassessment of the trustees based on the Tribunal's order as "information" under section 17(1)(b) of the Wealth-tax Act.
5. Inclusion of Hemant's interest in the trust property in his net wealth.

Detailed Analysis:

1. Inclusion of the entire value of the trust property in the net wealth of the trustees:

The court examined whether Hemant's interest in the trust fund was indeterminate and thus attracted the application of section 21(4) of the Wealth-tax Act. It was concluded that the trustees had absolute discretion over the application of the trust income for Hemant's benefit, making his interest indeterminate. Consequently, section 21(4) was applicable, and the entire value of the trust property was liable to wealth-tax in the hands of the trustees.

2. Determination of the part of the trust property liable to be assessed in the hands of the trustees and the assessee:

Given the conclusion that Hemant's interest was indeterminate, the court held that the entire trust property, including Hemant's beneficial interest, was assessable in the hands of the trustees under section 21(4). Thus, no part of the trust property was liable to be assessed in Hemant's hands.

3. Validity of the reassessment of the trustees based on the Appellate Assistant Commissioner's order as "information" under section 17(1)(b) of the Wealth-tax Act:

The court analyzed whether the Appellate Assistant Commissioner's order dated June 24, 1959, constituted "information" under section 17(1)(b). It was determined that the order, being a formal pronouncement from a quasi-judicial authority, qualified as "information as to law." Therefore, the reassessment of the trustees for the assessment year 1958-59 based on this order was valid. However, for the assessment years 1959-60 to 1961-62, the original assessments were made after the Appellate Assistant Commissioner's order, so no fresh information was available to justify reopening the assessments.

4. Validity of the reassessment of the trustees based on the Tribunal's order as "information" under section 17(1)(b) of the Wealth-tax Act:

The court considered whether the Tribunal's order dated October 17, 1962, constituted fresh information. It was concluded that since the Tribunal's order merely confirmed the Appellate Assistant Commissioner's findings, it did not provide any new information. Therefore, the reassessment of the trustees for the years 1959-60 to 1961-62 based on the Tribunal's order was invalid.

5. Inclusion of Hemant's interest in the trust property in his net wealth:

The court reaffirmed that Hemant's beneficial interest in the trust property was indeterminate, and thus, not includible in his net wealth. The trustees were liable to pay wealth-tax on the entire value of the trust property under section 21(4).

Conclusion:

- Question No. 1: Answered in the affirmative and in favor of the assessee.
- Question No. 2: Does not arise due to the answer to Question No. 1.
- Question No. 3: Answered in the negative and in favor of the assessee.
- Question No. 4: Answered in the negative and in favor of the assessee, except for the assessment year 1958-59 where the Appellate Assistant Commissioner's order constituted fresh information.
- Question No. 5: Answered in the negative and in favor of the assessee.

There was no order as to costs.

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