9911796707
TMI Blog1984 (1) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided not to remit the appeal for the assessment year 1980-81 to the AAC for his decision on merits in order to minimise the litigation. 3. The assessee is assessed in the status of an AOP. The assessment years are 1980-81 and 1981-82 and the relevant valuation dates are 31-3-1980 and 31-3-1981, respectively. 4. The common points in dispute are : (i) whether the shares of the beneficiaries are specific and, determinate, and (ii) whether the assessee is entitled to exemption as contemplated under section 5(1)(xxiii) of the Act in respect of the assets held by it. 5. The material facts are : (a) The assessee-trust was created under an indenture dated 25-3-1970 entered into between Her Highness Rajmata Saheba Shri Gulabkunverba Saheba of Nawanagar (the settlor) and S/Shri Premani Prabhulal Hirachand, Modi Mafatlal Maganlal and Hajarnis Purushottam Vasudev (the trustees). (b) Initially, Rs. 1 lakh was settled in trust. Subsequently, 670 shares of Tata Engineering and Locomotive Co. Ltd. valued at Rs. 1,50,000 were gifted and transferred in favour of the trustees by the settlor. (c) The beneficiaries of the assessee-trust were 11 individuals and Shri Ranjit Charity Trust. The indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies mentioned above, the same shall be handed over to the trustees of Shri Ranjit Charity Trust. The trustees can make an account payment to the beneficiaries (i) to (xi) every month subject to the adjustment that may be needed at the end of the year. In case, the net income of the trust fund is not sufficient for the payment of the stipulated amounts to the beneficiaries (i) to (xi) mentioned above the trustees shall be entitled to use the corpus, i. e., trust fund to make good the deficit. On the death of survivor of the beneficiaries (i) to (xi) mentioned above the income and the trust fund shall be handed over to the trustees of Shri Ranjit Charity Trust." 6. During the course of assessment proceedings, the assessee took up a stand that since the shares of the beneficiaries were specific and determinate it cannot be treated as discretionary trust and that the shares worth Rs. 1,50,000 were not exigible to tax by virtue of the provisions of section 5(1)(xxiii). The WTO, however, did not accept the assessee's contentions in the following manner : "The assessee has claimed that the shares of the beneficiaries are specific and that, therefore, this is not a discretionary trust. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided that the provisions of section 21(4) are applicable, it is obvious that the exemption as enumerated in Explanation 2 are not admissible to the assessee. The contention of the assessee that after the introduction of section 21(1A), there was nothing to deny the exemption as was in section 21(4) is not correct. The Explanation 2 holds good for the purpose of taxing the wealth of the assessee under section 21(4) and the said Explanation expressly provided that any assets referred to in clauses (xv), (xvi), (xxiii), (xxiv), (xxv), (xxvi), (xxvii), (xxviii) and (xxix) of sub-section (1) of section 5 shall not be excluded. In this view of the matter, it has to be held that the WTO has rightly denied the exemption under section 5(1)(xxiii) to the assessee." 8. Being aggrieved by the orders of the AAC, the assessee has come up in appeal before the Tribunal. The learned counsel for the assessee submitted that the wealth-tax authorities were not justified in holding that the provisions of section 21(4) were applicable to the assessee. Inviting the attention of the Tribunal to clause (3) of the indenture dated 25-3-1970 (reproduced above), the learned counsel for the assessee contende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is difficult to hold that the assessee-trust is a discretionary trust as held by the wealth-tax authorities. In fact, the ITO assessing the assessee-trust under the 1961 Act has treated the assessee as 'non-discretionary trust' and also has held that the shares of the beneficiaries are specific and determinate. In an integrated tax structure like the one in our country, we fail to appreciate how the revenue could take two different stand under two separate taxing statute where the relevant provisions are almost in pari materia. 10. We find from the order of the AAC under appeal that in deciding the appeal against the assessee he has followed his consolidated appellate order dated 1-7-1981 for the assessment years 1974-75 to 1979-80. During the course of hearing we were informed that against the said consolidated order of the AAC, the assessee had gone in revision before the Commissioner under section 25(1) of the Act, and the matter is still pending before him for the disposal. 11. On the facts and circumstances obtaining in the present case, we are of the view that the assessee is not a discretionary trust and that the shares of the beneficiaries are specific and determinate and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of 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 three per cent, whichever course would be more beneficial to the revenue : Explanation 2 : Notwithstanding anything contained in section 5, in computing the net wealth for the purposes of this sub-section or sub-section (4A) in any case, not being a case referred to in the proviso to this sub-section, any assets referred to in clauses (xv), (xvi), (xxii), (xxiii), (xxiv), (xxv), (xxvi), (xxvii), (xxviii) and (xxix) of sub-section (1) of that section shall not be excluded." It would be seen from the above that the withdrawal of exemption as contemplated under section 5(1)(xxiii) is in res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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