Madhya Pradesh H.C : Whether, on the facts and in the circumstances of the case, the Tribunal is justified in deciding that the wealth-tax assessment in the case of the assessee is to be made under s. 22(1) of the WT Act and not under s. 21(4) by holding that the beneficiaries as well as their shares are known ?

Sections WT 21(1), WT 27(3)

Asst. Year 1972-73

Counsel Appeared

R. C. Mukati, for the Revenue : None Appeared, for the Assessee

BY THE COURT

Shri R. C. Mukati, counsel for the applicant, was heard on the question of admission.

2. This is an application filed by the applicant, viz., CWT, under s. 27(3) of the WT Act, 1957, with a prayer to call upon the Tribunal to send the statement of the case in connection with the following questions of law:

“1. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in deciding that the wealth-tax assessment in the case of the assessee is to be made under s. 22(1) of the WT Act and not under s. 21(4) by holding that the beneficiaries as well as their shares are known ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that inasmuch as the WTO has made an assessment on the beneficiaries even if an assessment was to be made on trustees, such an assessment being one under s. 21(1) cannot mean any difference in tax liability and thereby not deciding the point that the WTO having exercised the option of making the assessment directly on the beneficiaries, he cannot now make the assessment on the trustees ?”

3.The facts giving rise to this petition may be stated, in brief, thus, which relate to the asst. yr. 1972-73.

The respondent-assessee filed its return of wealth for the assessment year on 26th June, 1971, the accounting period for which ended on Diwali, 1970. The assessee claimed that no assessment can be made in its case. The WTO, however, completed the assessment on a net wealth of Rs. 4,27,720 on 22nd Feb., 1979. Wealth-tax assessments were also made on the beneficiaries of the trust. Shri Nandikishore was assessed on a net wealth of Rs. 2,63,302 by an order of the WTO dt. 16th Jan., 1976. Shri Surendrakumar was assessed on a net wealth of Rs. 3,10,007 on 8th March, 1979. Wealth-tax assessment was also completed in the case of Arunkumar on 21st Jan., 1974. Similarly, the assessment of Shri Rajendrakumar was completed on the wealth as shown. The contention of the assessee was that since the WTO finalised the assessments of three out of the four beneficiaries prior to 22nd Feb., 1979, he is debarred from making an assessment on the trustees. The contention of counsel was that the WTO made, the assessment on the basis of the provisions of s. 21(4) of the WT Act ; as such the WTO had exercised the option of making the assessments directly on the beneficiaries and thus he could not make the assessment on the trustees.

The trust was created by a deed dt. 28th May, 1959. It was not noticed by the Departmental authorities that the shares of the beneficiaries were not specified in the trust deed. In the income-tax case, the contention of the assessee was that the trust had passed a resolution on 15th Dec., 1969, wherein they provided that distribution of the income of the trust property amongst the beneficiaries would be in equal proportion. On this basis, the claim of the assessee was that the trust as originally created stood modified. However, the Tribunal in the income-tax appeal found that the trustees were not given authority to modify the terms of the trust so as to change the shares which the income of the trust shall be utilised (sic). Therefore, the Tribunal relying on certain authorities held that on the relevant valuation date not only the beneficiaries are known but also their shares are equally known. They are also of the opinion that inasmuch as the WTO has made an assessment on the beneficiaries even if an assessment was to be made on the trustees, such an assessment being one under s. 21(1)cannot mean any difference in tax liability.

The Department filed a reference application under s. 27(1) of the WT Act which was rejected by the Tribunal, Indore Bench, Indore, in relation to the questions of law as proposed above. Hence, this petition.

8. After hearing learned counsel, in view of the Full Bench decision of this Court reported in [CWT vs. Smt. Tarabai Kanakmal (1982) 31 CTR (MP) 297 : (1983) 140 ITR 374 (AP) (FB)], we are of the opinion that no question of law as such arises as the Tribunal has given proper reasons.

Consequently, we see no valid ground to entertain this petition and decline to call upon the Tribunal to make a reference as prayed for.

The petition is, therefore, dismissed summarily.

[Citation : 169 ITR 531]