High Court Of Delhi
Commissioner Of Wealth Tax vs. Eternal Science Of Man’s
Section 3
Madan B. Lokur & Vipin Sanghi, JJ.
WT Ref. No. 14 of 1982
6th July, 2006
Counsel Appeared :
R.D. Jolly, for the Petitioner : O.S. Bajpai, for the Respondent
JUDGMENT
By the court :
In this reference under s. 27(1) of the WT Act, 1957 the following question of law has been referred for our opinion :
“Whether on the facts and circumstances of the case, the Tribunal was right in holding that 50,000 shares of M/s Motor and General Finance Ltd. are not ‘invested’ in a concern, in which any person referred in sub-s. (3) of s. 13 of the IT Act, 1961 has substantial interest as provided in Expln. 3 thereof ?”
2. Some of the trustees of the assessee were directors of a company called Motor General Finance Ltd. It appears that these persons were also trustees in some other trusts such as Daulat Central Education Society and Daulat Ram Public Mission etc. (compendiously called the Daulat Ram Trusts). The Daulat Ram Trusts donated 50,000 shares held by them in Motor General Finance Ltd. to the assessee. The WTO was of the view that the shares received by the assessee were in fact investments made by the trustees and, therefore, they were not entitled to the benefit of s. 13(2)(h) r/w s. 13(3) of the IT Act, as applicable to the WT Act. This view of the AO was upheld by the CWT(A) and also by the Tribunal. Under the circumstances, the above question of law has been referred for our opinion under s. 27 (1) of the WT Act.
3. It has been brought to our notice that this Court in CIT vs. Sir Sobha Singh Public Charitable Trust (2001) 167 CTR (Del) 358 : (2001) 250 ITR 475 (Del) dealt with a similar issue. In that case, one of the trustees of the assessee (Sir Sobha Singh) donated 1,500 shares in a company and 2,000 shares in another company to the assessee trust. This Court came to the conclusion that the shares received by the assessee were not investments made by it in those companies in which the donor had a substantial interest and, therefore, the assessee was entitled to the benefit of s. 13(2) (h) r/w s. 13(3) of the IT Act. On a reading of the aforesaid judgment, we note that a similar issue had arisen before some other High Courts including before the Calcutta High Court CIT vs. Birla Charity Trust (1987) 66 CTR (Cal) 172 : (1988) 170 ITR 150 (Cal) in which the same view was taken. Having heard learned counsel for the parties, we are of the opinion that there is no occasion for us to take a different view from what has already been taken by this Court. Under the circumstances, the question is answered in the affirmative and in favour of the assessee. The reference is disposed of accordingly.
[Citation : 296 ITR 445]
