Section 21A - Assessment in cases of diversion of property, or of income from property, held under trust for public charitable or religious purposes - Wealth Tax Act, 1957

1 [ Assessment in cases of diversion of property, or of income from property, held under trust for public charitable or religious purposes. 21A. 2 [Notwithstanding anything contained in clause (i) of section 5, where any property is held] under trust for any public purpose of a charitable or religious nature in India and 3 [(i) any part of such property or any income of such trust [whether derived from such property or from voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2 of the Income-tax Act] is used or applied, directly or indirectly, for the benefit of 4 [any person referred to in sub-section (3) of section 13 of the Income-tax Act], or (ii) any part of the income of the trust [whether derived from such property or from voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2 of the Income-tax Act], being a trust created on or after the 1st day of April, 1962, ensures, directly or indirectly, for the benefit of 5 [any person referred to in sub-section (3) of section 13 of the said Act, or] 6 [(iii) any funds of the trust are invested or deposited, or any shares in a company are held by the trust, in contravention of the provision of clause (d) of sub-section (1) of section 13 of the Income-tax Act,] wealth-tax shall be leviable upon, and recoverable from, the trustee or manager (by whatever name called) in the like manner and to the same extent as if the property were held by an individual who is a citizen of India and resident in India for the purposes of this Act 7 [***] : Provided that in the case of a trust created before the 1st day of April, 1962, the provisions of clause (i) shall not apply to any use or application, whether directly or indirectly, of any part of such property or any income of such trust for the benefit of 8 [any person referred to in sub-section (3) of section 13 of the Income-tax Act], if such use or application is by way of compliance with a mandatory term of the trust: 9 [Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.] 10 [ Provided 11 [ further ] that, 12 [(a) in the case of any association referred to in clause (21) of section 10 of the Income-tax Act, (i) the provisions of clause (i) and clause (ii) shall not apply ; and (ii) the other provisions of this section shall apply with the modifications that, (1) for the words, brackets, letter and figures "in contravention of the provisions of clause (d) of sub-section (1) of section 13 of the Income-tax Act", the words, brackets and figures "in contravention of the provisions contained in the proviso to clause (21) of section 10 of the Income-tax Act" had been substituted ; and (2) for the words "at the maximum marginal rate", the words and figures "at the rates specified in 13 [sub-section (2) of section 3]" had been substituted ;] (b) in the case of any institution, fund or trust referred to in clause (22) or clause (22A) or clause (23B) or clause (23C) of section 10 of the Income-tax Act, the provisions of 14 [clauses (i) to (iii)] shall not apply.] Explanation . For the purposes of this section, 15 [(a) any part of the property or income of a trust shall be deemed to have been used or applied for the benefit of any person referred to in sub-section (3) of section 13 of the Income-tax Act in every case in which it can be so deemed to have been used or applied within the meaning of clause (c) of sub-section (1) of that section at any time during the period of twelve months ending with the relevant valuation date; 16 (aa) [Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.] (b) "trust" includes any other legal obligation.] ------------------------- Notes:- 1. Inserted by the Finance Act, 1972, w.e.f. 1-4-1973. 2. Substituted vide the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1993. "Where any property is held" Earlier words "Where any property is held" were substituted for "Notwithstanding anything contained in clause ( i ) of sub-section (1) of section 5, where any property is held" by the Finance Act, 1992, w.e.f. 1-4-1993. 3. Substituted vide the following, as amended by the Finance Act,1976, w.e.f.1-4-1977, by the Finance Act, 1984, w.e.f. 1-4-1985. "( i ) any part of such property or any income of such trust whether derived from such property or from voluntary contributions referred to in sub-clause ( iia ) of clause (24) of section 2 of the Income-tax Act is used or applied, or ( ii ) any part of the income of the trust whether derived from such property or from voluntary contributions referred to in sub-clause ( iia ) of clause ( 24 ) of section 2 of the Income-tax Act, being a trust created on or after the 1st day of April, 1962, enures, directly or indirectly, for the benefit of any person referred to in sub-section (3) of section 13 of the Income-tax Act, wealth-tax shall be leviable upon and recoverable from the trustee or manager (by whatever name called) in the like manner and to the same extent as if the property were held by an individual who is a citizen of India and resident in India for the purposes of this Act, and ( a ) at the rates specified in Part I of Schedule I in the case of an individual ; or ( b ) at the rate of one-half per cent, whichever course is more beneficial to the revenue ;" 4. Restored to the original expression by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. This expression was earlier substituted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date. 5. Restored to the original expression by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. This expression was earlier substituted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date. 6. Restored to the original expression by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. This expression was earlier substituted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date. 7. Omitted vide the Finance Act, 1992, w.e.f. 1-4-1993. Before it was read as:- ", but without excluding the value of any asset under sub-section (1) of section 5, and at the maximum marginal rate" 8. Restored the original expression by the Direct Tax Laws (Amendment) Act,1989, w.e.f. 1-4-1989. Earlier, this expression was substituted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date. 9. Before omission, second proviso, as amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 and the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989, read as under : " Provided further that in a case where the aggregate of the funds of the trust invested in a concern in which any person referred to in sub-section (3) of section 13 of the Income-tax Act has a substantial interest as provided in Explanation 3 to that section does not exceed 5 per cent of the capital of that concern, the exemption under clause ( i ) of sub-section (1) of section 5 shall not be denied in relation to any property other than such investment, by reason only that the funds of the trust have been invested in a concern in which any person referred to in the aforesaid sub-section (3) has such substantial interest:" 10. Inserted by the Finance Act, 1984, w.e.f. 1-4-1985. 11. Substituted vide the Finance Act, 1992, w.e.f. 1-4-1993."also" 12. Restored to their original provision by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, the same was substituted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date. 13. Substituted vide the Finance Act, 1992, w.e.f. 1-4-1993. Before it was read as:- "Part I of Schedule I in the case of an individual" 14. Restored to their original provision by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, the same was substituted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date. 15. Restored to their original provision by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. Earlier, the same was substituted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date. 16. Prior to omission, clause ( aa ), as inserted by the Finance Act, 1984, w.e.f. 1-4-1985, read as under: '( aa ) "maximum marginal rate" means the rate of wealth-tax applicable in relation to the highest slab of wealth in the case of an individual as specified in Part I of Schedule I ;'