SPECIAL RANGE-I MADURAI Vs. A TENZINGSIVAKASI

JUDGEMENT

(1.) INCOME Tax Appellate Tribunal, Madras, 'b' Bench, referred the matter under Section 27 (2) of the Wealth Tax Act at the instance of the assessee, for opinion of this Court, raising the following question of law:

(2.) THE facts leading to the above question of law are as under: the assessment years are 1976-77, 1977-78 and 1978-79 for which the valuation dates are 31. 03. 1976, 31. 03. 1977 and 31. 03. 1978, respectively. The trust known as "tenzing Family Trust" was formed by Sri K. A. A. Sankaralingam on 01. 06. 1974. Shri A. Tenzing is the sole beneficiary of the Trust. In case he remains unmarried till the end of 18 years from the date of execution of the deed, the corpus as well as the accumulated income shall be handed over and delivered to him to be enjoyed by him absolutely. In the event of his marrying, the corpus as well as the accumulated income shall be handed over and delivered to the wife of Shri A. Tenzing from the date of marriage. The trustee shall accumulate the surplus income after deducting all the necessary outgoings for earning the income, and preserve the property of the Trust. The trustee is entitled to apply the income of the Trust for the benefit of Shri a. Tenzing in his absolute discretion till the date of marriage of Shri a. Tenzing and for the exclusive benefit of his wife immediately thereafter. Clause 5 of the Trust Deed declares that none of the beneficiaries shall have any vested interest either in the corpus or in the income of the Trust fund of this settlement, except as otherwise provided in the Deed. The assessee's interest in the Trust property until the expiry of the abovesaid period was included in his net wealth by the Assessing Officer and brought to tax, rejecting the assessee's contention that the net wealth of the Trust should be assessed only in the hands of the Trust. Aggrieved by the order of the assessment, the assessee filed an appeal to the Commissioner of Wealth Tax (Appeals ). The Commissioner of Wealth Tax (Appeals) held that, as the Trust properties were already assessed to wealth tax in the hands of the trustee for these assessment years, the same would not again be included in the hands of the assessee. Aggrieved by the order, Revenue filed an appeal to the Income tax Appellate Tribunal. Income Tax Appellate Tribunal dismissed the Revenue's appeal and allowed the case in favour of the assessee by following its own order relating to the assessment year 1979-80.

(3.) THE learned Standing Counsel appearing for the Revenue submitted that the assessment was rightly made in the hands of the assessee. The learned counsel for the assessee submitted that the assessments were made in the hands of the Trust and hence it is wrong making the assessment again in the hands of the assessee.