COMMISSIONER OF WEALTH TAX Vs. BHARAT CHARITY TRUST

JUDGEMENT

(1.) In this reference under Section 27(3) of the Wealth-tax Act, 1957, for the assessment year 1973-74, the following question of law has been referred to this court :

(2.) Shortly stated, the facts are that the assessment year involved is 1973-74, the relevant valuation date being March 31, 1973. The assessee-trust did not file any return of its net wealth under the Wealth-tax Act, 1957, for the aforesaid year. The Wealth-tax Officer issued notice under section 17 of the Wealth-tax Act on February 1, 1978. In response to the above notice, the assessee filed its return of wealth showing nil wealth claiming to be a charitable trust. The Wealth tax Officer held that the provisions of Section 21A of the Wealth-tax Act were attracted in this case as the assessee's funds remained invested for the benefit of persons referred to in section 13(3) of the Income-tax Act, 1961. The Wealth-tax Officer referred to the 3 per cent, unsecured loan bonds (2,075 Nos.) of Rs. 1,000 each in Ganesh Narayan Brijlal Ltd. which attracted the application of Section 21A. The above investment exceeded 5 per cent, of the capital of Ganesh Narayan Brijlal Ltd. He, accordingly, computed the net wealth of the assessee at Rs. 20,16,400.

(3.) The assessee appealed to the Commissioner of Wealth-tax (Appeals ) before whom it was submitted that the provisions of Section 21A are not attracted to the case of the assessee and that the Wealth-tax Officer was wrong in holding that the funds of the assessee-trust remained invested for the benefit of the person referred to in section 13(3) of the Income-tax Act, 1961.