9911796707
TMI Blog1987 (1) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... trustees in the status of an individual. The assessment year with which we are concerned is 1980-81. Material terms of the Trust Deeds are identical. In respect of each trust there are two categories of beneficiaries, viz., income beneficiaries and corpus beneficiaries. The value of the interest of these beneficiaries was deducted from the value of assets of the trust and the balance was brought to tax under s. 21(1A) of the WT Act, 1957. There is no dispute that balance remaining after reduction of value of interest of all categories of beneficiaries was assessable in the hands of the assessee under sub-s. (1A) of s. 21 which has been inserted w.e.f. 1st April, 1980. The assets held by the trustees in trust for the beneficiaries include sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be levied upon and recoverable from the trustee in the like manner and to the same extent, as it would be leviable upon or recoverable from the person for whose benefit the assets are held and the provisions of the Act shall apply accordingly. 5. On reading this provision in the light of the decision of the Supreme Court in CWT vs. Trustees of H. E. H. Nizam's Family Trust 1977 CTR (SC) 306: (1977) 108 ITR 555(SC). It is obvious that what is chargeable under this provision in the hands of the trustee is not the net value of the assets held by the trustee in trust for the beneficiaries but the value of the interests of the beneficiaries. This value would obviously be less than value of assets held by the trustee. Consequently, the differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue." 7. Under this provision excess arising out of difference between the value of assets held by the trustee and value of interest of beneficiaries would become chargeable in the hands of trustee. The sub-section says that wealth tax shall be levied upon the trustee "in respect of value of such assets" to the extent of said excess as if the said excess were the net wealth of an individual who is citizen of India and resident in India for the purposes of the Act at the rates specified in Part I of Schedule I or at the rate of three per cent whichever course would be more beneficial to the Revenue. 8. It is thus clear that the wealth tax is leviable in respect of value of assets to the extent of the excess referred to above treating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 5(1A) of the Act. Consequently, exemption under said provision is allowable. We do not accept the contention on behalf of the Department that since the excess is to be treated as net wealth under sub-s. (1A) of s. 21 that net wealth itself would be chargeable to tax under s. 3. Sub-s. (1A) of s. 21 does not say so and there is no indication in support of that view in the language. If that had been the intention it would have stated by direct language. In that case there would have been no need to create a fiction that such excess was net wealth of an individual who was citizen of India and who was resident in India. The intention is to treat it as net wealth of individual in the first instance and then allow such deduction under other pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be said to have been owned by them and as such exemption under s. 5(1A) would not be available. This submission does not appear to have been raised before any of the lower authorities. Besides, we find that the submission is not sustainable because the trustee is the legal owner of the property held by him in trust for the beneficiary. In s. 21(1A) a fiction has been created to the effect that those assets which are held in trust belonged to an individual and wealth-tax shall be levied on the said assets to the extent of excess referred to above. If we carry this fiction to the logical end, the assets would be deemed to have been owned by the trustee. Consequently, nothing contained in sub-s. (3) of s. 5 would be a bar for grant of e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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