Law:

Section:

Section 27(3) of the Wealth-tax Act, 1957-Reference to high court-Question of law-Tribunal, following its earlier order made in income-tax appeal of a trust created by assessee-HUF, held that value of trust property was not includible in wealth of assessee-HUF and also rejected revenue's reference application on certain questions-However in income-tax reference application tribunal had held that the same questions of law arose out of its order-Whether tribunal correct in holding that no question of law arose from its order in wealth-tax proceedings-Held, on facts, no Facts The assessee-HUF, consisting of the karta, his wife and their four sons, owned a rice mill and a building. By a registered deed dated 19-4-1964, the major members of the HUF, settled a trust in respect of the aforesaid building for the benefit of the wife and sons of the karta equally in their individual capacities. For the assessment years 1965-66 and 1966-67, the ITO included the income from the trust property in the income of the assessee-HUF holding that the trust was invalid. Later on, in wealth-tax assessments for the years 1965-66 to 1973-74, the WTO, following the aforesaid order of the ITO, included the value of the building in the taxable wealth of the assessee-HUF. On appeal, the AAC following his order in the income-tax appeals wherein he had held that the trust was a valid trust, excluded the value of the building from the taxable wealth of the assessee-HUF and allowed all the appeals. On further appeal by the revenue, the Tribunal upheld the AAC's order holding that it had already decided in the income-tax appeals of the trust that the trust deed was valid, the trust was a legal entity liable to pay tax and the assessee-HUF could not be saddled with the tax liabilities of the trust. The revenue, thereafter, filed an application under section 27(1) seeking a reference on the following questions to the High Court: (i) whether, on the facts and circumstances of the case and on a proper construction of the trust deed, the Tribunal was right in holding that the trust created under the said deed was valid and not inconsistent with any of the provisions of the Indian Trust Act, 1882 ;…

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