1990 (3) TMI 95 - AT - Wealth-tax

Summary

Issues:
1. Whether the appellant is a specific trust?
2. Whether the appellant trust is entitled to exemption under s. 5(1)(xxiii) of the WT Act, 1957?

Issue 1: Specific Trust Status
The appellant trust was created for the benefit of the settlor's five daughters. The trust deed initially had a clause regarding expenditure for beneficiaries, which was later rectified through an addenda. The amended clause clearly outlined the distribution of income among the daughters and their children. The settlor's share was equally distributed among the daughters upon his demise. The trust had been assessed as a specific trust in previous years, and the beneficiaries and their shares were well-defined. The appellant trust consistently treated as a specific trust by both income-tax and wealth-tax authorities. The tribunal found no reason to deviate from this long-standing position. The rectified clause removed any confusion over beneficiary shares, establishing the trust as specific. Consequently, the tribunal held that the appellant trust qualified as a specific trust, entitling it to the claimed deductions.

Issue 2: Exemption under s. 5(1)(xxiii) of the WT Act
Regarding the entitlement to exemption under s. 5(1)(xxiii) of the WT Act, the tribunal referred to previous decisions supporting the treatment of a trust as an individual for exemption purposes. Citing various tribunal decisions, it was established that a trust could be considered an individual for exemption under the Act. Based on this precedent, the tribunal vacated the order of the Deputy Chief Wealth Tax Officer related to the appellant's entitlement for exemption under s. 5(1)(xxiii). The tribunal ruled in favor of the appellant trust, granting exemption up to Rs. 1,50,000 in respect of the value of shares of limited companies. This decision was supported by the tribunal's interpretation of the law and consistent application of exemptions to trusts as individuals.

In conclusion, the appellate tribunal ruled in favor of the appellant trust on both issues. The trust was recognized as a specific trust based on the clear beneficiary shares outlined in the rectified trust deed. Additionally, the trust was deemed entitled to exemption under s. 5(1)(xxiii) of the Wealth Tax Act, allowing for the claimed deductions and exemptions. The tribunal's decision was grounded in legal precedent and a thorough analysis of the trust's structure and past treatment by tax authorities.