9911796707
TMI Blog1988 (2) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in this section, where the shares of the persons on whose behalf or for whose benefit any such assets are held are indeterminate or unknown, the wealth-tax shall be levied upon and recovered from the court of wards, administrator-general, official trustee, receiver, manager, or other person aforesaid (as the case may be, in the like manner and to the same extent as it would be leviable upon and recoverable from 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 ; or (b) at the rate of one and one-half per cent. " Part I of Schedule I states as under: " (1) In the case of every Individual ...... (a) Where the net wealth d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a consideration of the rival submissions, we are of the opinion that the assessee is entitled to succeed. It has been held by the Supreme Court in the case of CWT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust [1977] 108 ITR 555 that every case of assessment on a trustee must necessarily fall under section 21 and he cannot be assessed apart from and without reference to the provisions of that section. In other words, section 21 has been construed as a charging section. Sub-section (4) creates a fiction in that the discretionary trust is subject to levy of wealth-tax as if it were an individual. Such an individual will necessarily be taxed under the Schedule with the corollary that if the net wealth of that individual does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subject to that rate. If this clause had read "at the rate of one and a half per cent of the net wealth" [Emphasis supplied], then there would have been no doubt at all. But can we read these words into the section especially when the Supreme Court has said that it is a charging section ? It is a trite saying that in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment ......... " There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied . . ." (Per Rowlatt, J., Cape Brandy Syndicate v. IRC [1921] 1 KB 64, 71). 7. Thirdly, the section requires the levy of tax at the rates specified in Part I or at the rate of one and a half per cent. This only means that in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onary trusts. But this actually underscores the point that without such a specific provision this assessee cannot be denied the benefit that is available to an individual when the assessee is required to be assessed as an individual by the section itself. Therefore, the denial of this exemption by an assumption that the rate is to be applied to the net wealth without reference to the Schedule is clearly discriminatory. The situation is more glaring in the subsequent years where the rates specified by clause (b) is even greater than the rate specified even in the subsequent slabs and not only the first slab, in Part I of the First Schedule. The Supreme Court has held in the case of K.P. Varghese v. ITO [1981] 131 ITR 597 that the court must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s such without reference to the Schedule or the basic exemption granted there under which is applicable to all individuals. 10. Last but not the least, we must remember the statement of law given by the Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 that if the court finds that the language of a taxing provision is ambiguous or capable of more meanings than one, then the court has to adopt that interpretation which favours the assessee. For all these reasons we are convinced that an assessee-discretionary trust is not liable to tax as long as the net wealth does not exceed the basic amount of exemption prescribed in the Schedule. 11. In the light of the foregoing discussion, we find that for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned was only Rs. 99,800 which is less than the limit of Rs. 1,50,000 prescribed for this year as basic exemption. As in the preceding year, we must hold that it is not liable to tax and in any event the rectification made cannot be upheld as there is no mistake apparent from record since the issue is debatable. The order of rectification made u/s 35 for the assessment year 1980-81 is cancelled. For the assessment year 1982-83 the net wealth determined is Rs. 4,47,500 which is beyond the amount of basic exemption and becomes fully taxable. Hence, the assessee has no case for exemption for this year. 12. In the result, WTA Nos. 805, 806, 808 and 809/Mds./87 are allowed while WTA Nos. 807 and 810/Mds./87 are dismissed. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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