Law: Wealth Tax Act, 1957

Section: 17,21(4),25,14

(a) Wealth tax--- ---- Representative assessee---Assessment---Return---Law applicable---Effect of insertion of subsection (1-A) in S.21--Difference between value of corpus and aggregate of shares of beneficiaries is assessable---Representative assessee need not file a separate return in respect of such residue---Indian Wealth Tax Act, 1957, S.21. (b) Wealth tax--- ----Reassessment---Condition percedent---Reason to believe that wealth has escaped assessment---Nexus is necessary between material on record and belief that wealth has escaped assessment---Notice of reassessment on the ground that trustees had not filed return in respect of residual wealth--­Reassessment proceedings could not be justified on other grounds--­Reassessment proceedings were not valid---Indian Wealth Tax Act, 1957, S.17. Prior to the amendment introducing subsection (1-A) in section 21 of the Wealth Tax Act, 1957, the words "Subject to the provisions of subsection (1-A)" were absent in section 21(1). The Supreme Court held in a connected case (CWT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust (1977) 108 ITR 555) that in the absence of a specific provision, the residue being the difference between the value of the corpus and the aggregate value of the shares of the beneficiaries who have a life interest and the remainder men, cannot be brought to tax. Subsection (1-A) was introduced for the specific purpose of taxing that residue. Sub­section (1-A) was amended to introduce the words "or for whose benefit". The section is therefore, in conformity with the decision of the Supreme Court and recognises the trustee as a person holding the property for the benefit of others and not as a person holding the property on his own. Wherefore, any return required to be filed by him under section 14 will be only with reference to the "net wealth of any other person" being the beneficiaries and not "his net wealth". The legal fiction can be expanded only in the filed it operates. In the present case, the fiction is with reference to the assessment of the residue of the wealth held in trust Such wealth has to be assessed in the name of the trustee-only as a representative assessee. As…

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