Law:

Section:

Section 5(1)(i) of the Wealth Tax Act, 1957 - Exemptions - Position prior to 1-4-1993 - Assessment year 1957-58 - Whether where primarily or predominantly objects of trust are of a public charitable nature, corpus would qualify for exemption under section 5(1)(i) - Held, yes FACTS 'H' died in Bombay on 19-2-1920, leaving a will dated 28-4-1919, with a codicil thereto dated 11-2-1920. The will was in Gujarati language. The said will was proved and probate granted by the Bombay High Court on 11-12-1920. The then executors and trustees under the said will executed a deed of trust on 26-7-1926; the same was registered on 1-9-1926, under the Indian Registration Act. The trust was assessed to wealth-tax for the assessment year 1957-58. Before the WTO it was, inter alia, contended that the trust being a public charitable trust, the assets were exempt under the provisions of section 5(1)(i) of the Wealth-tax Act. The WTO held that the considerations which applied to exemption under section 5(1)(i) of the Act were analogous to the considerations to the exemption allowed under section 4(3)(i) of the Indian Income-tax Act, 1922, and determined the ratio of wealth liable to be taxed on that footing at 195 : 258. There was an appeal against the assessment to the AAC, who directed the WTO to complete the assessment in accordance with the observations in the order of the AAC. Subsequent to that order the WTO completed the assessment for the year under reference by his assessment order dated 9-5-1962. There was further appeal against the said assessment to the AAC. It was, inter alia, was urged before the AAC was that the quantum of net wealth determined by the WTO was wrong, as the WTO should have applied the exemption under section 5(1)(i) in the same ratio as income from the assets were exempted for income-tax purposes under section 4(3)(i) of the Indian Income-tax Act, 1922. On this point the AAC took the view that an exemption from levy of wealth-tax was available only to properties held under trust or other legal obligation wholly for any public purpose of a charitable or a religious nature. According to the AAC, the properties held by the trustees were not held wholly…

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