1992 (1) TMI 45

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..... is exempt under section 5(1)(i) of the Wealth-tax Act, 1957 ? " Shortly stated, the facts are that the assessment year involved is 1973-74, the relevant valuation date being March 31, 1973. The assessee trust did not file any return of its net wealth under the Wealth-tax Act, 1957, for the, aforesaid year. The Wealth-tax Officer issued notice under section 17 of the Wealth-tax Act on February 1, 1978. In response to the above notice, the assessee filed its return of wealth showing nil wealth claiming to be a charitable trust. The Wealth-tax Officer held that the provisions of section 21A of the Wealth-tax Act were attracted in this case as the assessee's funds remained invested for the benefit of persons referred to in section 13(3) of th .....

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..... for the assessment years 1972-73 and 1973-74, relied on the decision of the Tribunal in Birla Charity Trust. Section 21A of the Wealth-tax Act as it stood at the material time is extracted to the extent relevant for the issue : " 21A. Assessment in cases of diversion of property, or of income from property, held under trust for public charitable or religious purposes. Notwithstanding anything contained in clause (i) of sub-section (1) of section 5, where any property is held under trust for any public purpose of a charitable or religious nature in India and (1) 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 sectio .....

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..... mit or lay out any part of its existing assets to acquire the said shares. Apart from the acceptance by the assessee of the said shares, there was no decision or action on the part of the assessee. There was, therefore, no investment of funds of the assessee within the meaning of section 13(2)(h). Moreover, the assessee received the said shares of the company prior to June 1, 1970. Therefore, the user or the application of any property of the assessee for the benefit of persons referred to in section 13(3), if any, occurred prior to June 1, 1970, and hence the proviso to section 13(1)(d)(iii) applied. The assessee was entitled to claim exemption in respect of dividends from the said shares. In this case, the Tribunal found that the assess .....

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