COMMISSIONER OF WEALTH TAX Vs. K SANTHANAM TRUST

JUDGEMENT

(1.) The Income Tax Appellate Tribunal has stated the case and referred the following question of law in relation to the assessment years 1982-83 to 1987-88 of the assessee:- Whether on the facts and in the circumstances of the case the Tribunal was right in law in holding that since the assessee is to be taxed as an 'Individual' for the purpose of the Wealth Tax Act under Section 21(4), the benefit under Section 5 of the Act cannot be denied to the assessee?

(2.) The brief facts necessary for the disposal of the case are that the assessee is a Trust and the individual shares of the beneficiaries of the Trust are indeterminate and unknown. It is a discretionary Trust and all the Authorities have found that the assessee is a discretionary Trust and the question that arises in the Tax Cases is whether the assessee, the Trust is entitled to the benefit of Section 5 of the Wealth Tax Act when the assessment was made invoking Section 21(4) of the Wealth Tax Act, 1957(hereinafter referred to as 'the Act').

(3.) We have gone through the provisions of Section 5 and also Section 21 of the Act. It is seen that certain deductions under Section 5 of the Wealth Tax Act are available only to an individual and one such sub-section is Section 5(1)(xxiii) of the Act, which grants exemption to the shares held by the individual or Hindu Undivided Family and Section 5(1A) of the Act also provides maximum ceiling limit of exemption. The Wealth Tax Officer held since the assessee-Trust was assessed in the status of Association of Persons, the assessee was not entitled to the exemption available to an individual under Section 5(1) of the Wealth Tax Act. His view was confirmed by the Commissioner of Income Tax (Appeals). The Tribunal, however, held that the provisions of Section 21(4) of the Act would apply and the assessee would be entitled to all the exemptions available to an individual and the said order of the Tribunal is the subject matter of these Tax Case References.