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TMI Blog1983 (10) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... s directed against this order of the Commissioner. 2. The learned counsel for the assessee has pointed out that the order of the WTO was properly made. It was neither erroneous nor prejudicial to the revenue. The assessment was made by resorting to the provisions of section 21(1A). The WTO in the original assessment had granted a deduction under section 5(1) read with section 5(1A) which the assessee-trust was entitled to under the law. Explaining his stand, the learned counsel has pointed out that the provisions of section 21(1A) applied to 'such' assets. In section 21 the expression 'assets' chargeable to tax under the Act were dealt with and it is those assets which formed the subject-matter of section 21(1A). What is not chargeable, therefore, to wealth-tax will not come, according to the learned counsel, at all under section 21(1A). Section 5, according to the learned counsel, deals with exempted assets some of them not liable to tax at all and some of them not includible in the net wealth. Exemption under section 5(1)(xxiii), relevant to the present case, is available to an individual and a HUF and in view of the specific provisions in section 5(1A) for grant of deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rustee or any receiver or manager or any other person, by whatever name called, appointed under any order of a court to manage property on behalf of another, or any trustee appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise (including a trustee under a valid deed of wakf), the wealth-tax shall be levied upon and recoverable from the court of wards, administrator-general, official trustee, receiver, manager or trustee, as the case may be, 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, and the provisions of this Act shall apply accordingly. " " (1A) Where the value or aggregate value of the interest or interests of the person or persons on whose behalf or for whose benefit such assets are held falls short of the value of any such assets, then, in addition to the wealth-tax leviable and recoverable under sub-section (1), the wealth-tax shall be levied upon and recovered from the court of wards, administrator-general, official trustee, receiver, manager or other person or trustee aforesaid in respect of the value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii), (xxviii), (xxix), (xxxi) and (xxxii), not being deposits under the Post Office Savings Bank (Cumulative Time Deposits) Rules, 1959, to the extent the value thereof exceeds, in the aggregate, a sum of one hundred and fifty thousand rupees : " 5. In making an assessment under section 21(1) in the case of a trust where property is held for life tenants and thereafter for remaindermen, the beneficial interest of each of these category of persons would get assessed either in their hands at the rates appropriate to them or in the hands of the trustees themselves at the rate appropriate to the beneficiaries. While the interest of the life tenants as present holders of the interest would be equal to a particular portion of the assets of the trust, the interest of the remaindermen or reversioners who would be entitled to receive the amounts after a time would correspond to the present value of the balance of assets after the life tenants are exhausted. This present value would be less than the actual value of the assets covered and which would be available to the reversioners or remaindermen at a later date. Where, therefore, assessments are made in respect of the assets belonging to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 3 of the Act. The levy is to be made under section 3 only in respect of the net wealth on the valuation date of every individual, HUF and company. If an entity does not fall under any of these three heads, it would automatically be outside the wealth-tax net. If, therefore, a trust does not fall under any of these three entities, it would be non-assessable to wealth-tax. The assessment in the present case, as in almost every case of a trust, is made in the status of an individual. Apart from section 3, there is no charging section in the Act. Section 21 deals with the case of assessment where assets are held by Court of wards, administrator-general, etc. These representative assessees' hold assets on behalf of the specified other individuals or entities. Section 21 provides a special procedure for levying tax on them, but for this reason section 21 does not itself constitute a charging section. An assessment, therefore, even in the case of a trust is to be made exactly in the same manner as would be made in the case of the three entities referred to above and the charge in every case is on the net wealth of the assessable entity. The expression 'net wealth' i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (1), but section 21(1) itself relates only to 'in the case of assets chargeable to tax under this Act'. Where, therefore, an asset is not chargeable to tax, in other words, exempted from wealth-tax, the provisions of section 21(1) would not apply to the case at all. Section 21(1A) deals with matters considered under sub-section (1) and specifically mentions 'such assets'---which means only assets covered by section 21(1). Thus, both by its reference to the levy and recovery of wealth-tax under sub-section (1) and the reference to 'such assets' the operation of sub-section (1A) is restricted to taxable assets. Even sub-section (1A), therefore, would not refer to an asset which is exempt from wealth-tax. Our view, therefore, that an asset exempted under section 5 to the limit the exemption operates, would not come under section 21(1) and, consequently, under section 21(1A) is supported by this inbuilt evidence obtaining in section 21. There are also other provisions of section 21 which support the above view. Section 21(4) deals with the case where the assets are held 'indeterminate'. Explanation 2 to this sub-section specifically refers to section 5, sub-section (4), sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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