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TMI Blog1973 (7) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 4(1)(a)(iii) of the Wealth-tax Act, 1957, on the ground that the assessee had not acquired any material benefit thereunder ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the benefit contemplated in section 4(1)(a)(iii) of the Wealth-tax Act, 1957, was only a material benefit and would not include a spiritual benefit? " For the assessment of wealth-tax on his Highness Sri Rama Varma Maharaja of Travancore (hereinafter referred to as " the assessee ") for the assessment years 1965-66 and 1966-67, the question arose whether the properties of the trust created by the assessee by the trust deed dated 31st March, 1960, annexure " A " to the statement of the case, were to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... child (not being a married daughter) or both, or ........... " It is necessary for the application of the section, (1) that there had been a transfer by the individual to a person or association of persons, (2) that such transfer was otherwise than for adequate consideration, and (3) that the transfer was for the immediate or deferred benefit of the individual, his or her spouse or minor child or both. The properties regarding which the trust has been created solely and exclusively belonged to the assessee. The properties have been transferred to the trustees under the trust deed, annexure " A ", and this is clear from the terms of the trust deed itself. The trustees appointed are the assessee himself and his younger brother, His High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that can arise to the members of a family from poojas and homams performed in accordance with the terms of a trust deed is the type of benefit that is contemplated by section 4(1)(a)(iii) of the Act. On behalf of the assessee it was contended that there must be a more direct nexus between the assets held and the benefits than a connection that can be said to exist by the utilisation of the income from the assets for the purpose of poojas which poojas in turn may confer the benefits visualised by the trust deed. Spiritual is the object of the trust deed. Mental is the consolation which is sought to be achieved, though one cannot deny that a desire for material prosperity is not unlinked with the objects sought to be achieved by the creation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation for any public purpose of a charitable or religious nature. Section 21 provides for the imposition of tax on trustees " in the like manner and to the same extent as it would be leviable upon and recoverable from the person on whose behalf or for whose benefit the assets are held ". So, the assessee is liable to be assessed as a trustee of the trust properties under section 21 of the Act, the trust not being of public nature. In fact it was so that the assessee had been taxed till and inclusive of the year 1964-65. It is clear that the provisions in sections 21 and 4(1)(a)(iii) are not mean to be simultaneously applied to the same assets. If it is section 21 that is to be applied to this case, the entire trust properties which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assets of the trustee by applying section 4(1)(a)(iii). The wording of section 4(1)(a)(iii) indicates that it has limited application. However wide an interpretation is placed on the section, we think that it will not apply to a case where the properties are held not for the benefit of the individual and not for the benefit of his or her spouse or of his minor child or of any conceivable combination of these persons, but by other entries which fall outside those mentioned in the section. To be more explicit, if properties are held for the benefit of the family of the transferor--we are assuming here that the sort of benefit arising from the provisions of the trust deed in question is a benefit that would fall within the meaning of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered after taking into consideration all material evidence and that, therefore, the departure made by the department from the old practice was arbitrary and was merely based on the opinion of the officer who differed from the view that had been earlier accepted. We do not think that we should deal with this aspect either in these tax referred cases. We answer question No. 1 referred to us in the affirmative, that is, in favour of the assessee and against the department. In view of our answer to question No. 1 based on our finding that section 4(1)(a)(iii) is not attracted, we consider it unnecessary to answer the second question. We direct the parties to bear their respective costs. A copy of this judgment under the seal of the Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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