1986 (1) TMI 140 - AT - Wealth-tax

Summary

Issues:
1. Whether the executors of the estate are entitled to exemption under section 5(1)(i) of the Wealth-tax Act, 1957 for the assessment years 1973-74 to 1975-76.
2. Whether the executors can be assessed as trustees of a charitable trust for the properties in question.

Analysis:
1. The appeals by the department contested the AAC's decision granting exemption under section 5(1)(i) to the executors of the estate. The executors claimed that the residuary estate merged with a charitable trust as per the deceased's will. However, the department argued that since the shares were not transferred to the trust, exemption did not apply. The tribunal noted that until the residue is ascertained and the executor assents to the legatee, the residuary legatee has no interest. The executors were charged under the Wealth-tax Act as executors, not trustees. The tribunal held that the executors were not entitled to claim exemption under section 5(1)(i) as the properties vested in them, not the trust, on relevant dates.

2. The executors maintained that the assets belonged to the charitable trust, but the tribunal found that the executors treated the properties as vested in them, not the trust, for wealth-tax purposes. The tribunal emphasized that the charitable trust did not consent to the executors holding the property on its behalf. The tribunal held that the executors were liable to be assessed as executors, not trustees. The tribunal also considered the transfer of funds to the trust before the valuation date, noting that assets must be distributed to the legatee for assessment purposes. Consequently, the tribunal set aside the AAC's decision and reinstated the assessment orders made by the WTO.

In conclusion, the tribunal allowed the department's appeals, ruling that the executors of the estate were not entitled to exemption under section 5(1)(i) of the Wealth-tax Act for the assessment years in question. The tribunal held that the executors were to be assessed as executors, not trustees of the charitable trust, for the properties in question.