9911796707
TMI Blog1982 (3) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... deed dated 6-11-1931 as modified by a covenant dated 6-5-1962. The life interest belonged to Dharamdas (son of Harkorebai) and after his death the corpus would go to the assessee and his brother, Amresh Dharamdas, in equal parts. Shantabai Dharamdas Trust was created by Shantabai, wife of Dharamdas, on 7-4-1943. Shantabai retained the life interest in the trust for herself and after her death the corpus would go to the assessee and his brother, Amresh Dharamdas, in equal parts. Dharamdas Hargovindas and Gordhandas Dharamdas Joint Trust was created by Dharamdas Hargovindas and Gordhandas Hargovindas on 14-10-1943. The life interest was with Dharamdas and after his death the income was to be paid to the benefit of the assessee for his life and upon the death of the survivor (between Dharamdas or the assessee whoever died last) the corpus would belong to the assessee's sons. 3. In the wealth-tax proceedings, the assessee appended a note to the return of net wealth and also in the letter dated 9-6-1962, it was stated that the assessee did not have any life interest in the trusts at present. These trusts had filed the returns and after deducting the value of the life interest of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The revenue is in appeal against the order of the AAC objecting to the AAC holding that the assessee's beneficial interest as remainderman in the four trusts could not be included in the total wealth of the assessee. On behalf of the revenue, it was submitted that under section 21(1), wealth-tax should be levied upon the trustees direct in the like manner and to the same extent as it would be leviable and recoverable from the persons on whose behalf the assets were held by the trustees. In the instant case, no doubt, the same quantum of the life interest was taxed in the hands of the trusts as in the case of the assessee, who was the beneficiary, it was not assessed to the same extent. It was explained on behalf of the revenue that what was meant by 'to the same extent' was that the rate applicable to the quantum of life interest was at lower rate in the hands of the trusts. For example, in the case of the assessee for the assessment year 1968-69, the assessee's life interest in Sheth Hargovindas Jiwandas Family Trust was valued at Rs. 2,08,798 as a part and parcel of the total wealth of Rs. 12,98,432 as belonging to the assessee which would be taxable at the rates applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hands at the appropriate rate and to the amount which would have been recoverable in the hands of the beneficiaries. While dealing with the case of one of the beneficiaries of the trust, the Income-tax Officer again included for rate purposes his share in the income of the trust. The reason advanced by him was that the amount of tax leviable should be the same whether the income from the trust is assessed in the hands of the trustees or in the hands of the beneficiaries and if the proportionate income from the trust is not included for rate purposes in the hands of the beneficiary, his income other than the income from the trust would be taxed at a rate lower than that which would have been applicable if the trust income were assessed directly in his hands. 2. The Board have been advised that the approach of the Income-tax Officer is not correct. Section 41 of the 1922 Act gave an option to the department to tax either the representative assessee or the beneficial owner of the income. Once the choice is made by the department to tax either the trustee or the beneficiary, it is no more open to the department to go behind it and assess the other at the same time. The inclusion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uarial valuation on the respective valuation dates. He has directed that the assessee should get the valuation done actuarially and supply it to the WTO. For this purpose, he directed the WTO to look into the question of loans given to Dharamdas Hargovindas and to decide whether these loans were recoverable. While making the assessments, he directed the WTO to consider whether the inclusion of the assessee's interest in the Sheth Hargovindas Jiwandas Family Trust would be more beneficial to the revenue then the assessments on the trust itself. The revenue has objected to the order of the AAC firstly, on the same ground that the assessee's life interest in the remaining three trusts, namely, Bai Harkorebai Hargovindas Trust, Shantabai Dharamdas Trust and Dharamdas Hargovindas and Gordhandas Dharamdas Joint Trust, could not be included in the total wealth of the assessee. Admittedly, the assessments in the case of the trustees in respect of the assessee's life interest in these trusts have been made prior to the direct assessment on the assessee in respect of his life interest in these trusts. For the same reasons as in respect of the five preceding years detailed earlier in this ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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