1975 (11) TMI 71 - AT - Wealth-tax

Summary

Issues:
1. Whether the shares of the beneficiaries are indeterminate or unknown to warrant the application of section 21(4) of the Wealth Tax Act.

Detailed Analysis:
The case involved a situation where a sum of money was set aside for the marriage expenses of four daughters by their father and entrusted to their mother as trustee and guardian. The Wealth Tax Officer (WTO) assessed the amount in the status of an individual under section 21(4) of the Wealth Tax Act, stating that the shares of the beneficiaries were indeterminate and unknown. Upon appeal, the Commissioner (Appeals) held that the beneficiaries were a fixed number of persons with determinate shares, as the amount was held on behalf of the beneficiaries as tenants-in-common. The Commissioner further noted that two daughters had already received their 1/4th share upon attaining majority. The Revenue challenged this decision before the Tribunal, arguing that the shares of the beneficiaries were indeterminate due to the possibility of unequal marriage expenses for the daughters.

The key contention before the Tribunal was whether the shares of the beneficiaries were indeterminate or known to warrant the application of section 21(4) of the Wealth Tax Act. The declaration deed clearly stated that the sum of money belonged to the four daughters, and two daughters had already received their shares upon attaining majority. The Tribunal referred to legal precedents to support the principle that if beneficiaries are well-defined and definite, they take equal shares even if the document does not specify their shares. The Tribunal emphasized that the number of beneficiaries was definite in this case, and the money belonged to the daughters as tenants-in-common, entitling them to equal shares. The Tribunal also highlighted that the shares of the beneficiaries must be known and specific during the relevant accounting period, as per legal interpretations in previous cases.

Ultimately, the Tribunal ruled in favor of the assessee, stating that the shares of the beneficiaries were known and specific during the relevant accounting period. The Tribunal rejected the Revenue's argument that future unequal spending on marriage expenses could make the shares indeterminate, emphasizing that the shares were definite and known based on the declaration deed. As a result, all the appeals by the Revenue were dismissed, upholding the decision that there was no basis for the application of section 21(4) of the Wealth Tax Act in this case.