Law: Wealth Tax Act, 1957

Section: 21(4)

Section 3 read with section 21(4) of the Wealth-tax Act, 1957 - Charge of tax - Assessment years 1957-58 to 1959-60 - Whether although a HUF consists of a number of persons it is not an association of persons or a firm or a company which is created by act of parties - Held, yes - Whether therefore, mention of HUF as a unit of taxation under section 3 is not intended to exclude other groups or associations of persons which are capable of being treated as a unit - Held, yes - Whether where a group of trustees who had been assessed to tax is status of individual claimed that they formed association of persons among and were not liable to tax, trustees were joint legal owners of properties of trust and were rightly assessed to wealth tax in respect of wealth held by them - Held, yes FACTS 'L', (since dead), settled certain shares by a deed with himself his wife, 'B', his son, 'A' and 'C' as trustees. Under this trust, 'A' and 'B' were to have life interest to the extent of 3/4th and 1/4th of the net income from the trust properties, after the whole income to his widow for the purposes of maintenance, education and other expenses of herself and her children, the rest and remainder vesting in the children of 'A' per stirpes, after the demise of the last life tenant. Notices under section 17 served on 'A' and others as trustees of the trust were returned declaring 'nil' wealth. It was contended in the proceedings that the trustees formed an association of persons among themselves and that there was no provision in the Act for assessing such associations. The WTO repelled that contention and assessed the trustees as an individual. On appeal, the AAC upheld the action of WTO. On second appeal, the Tribunal held that the assessments were on the trustees in the status of an individual. It could not be denied that the trustees were the joint legal owners of the properties of the trust and it was they who were sought to be assessed in those assessments; they did not have any separate title. The assessments, therefore, did not conflict with either the charging section or section 21(4) in the manner contended in the grounds of appeal. The assessments were valid and…

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