Law: Wealth Tax Act, 1957

Section: 27(1),5(1)(i),21A

Law: Income Tax Act, 1961

Section: 11,13(4),80J

Wealth tax--- ---- Charitable trust---Exemption---Denial of exemption when aggregate of funds of trust invested in a concern, in which any person referred to in S.13(3) of Income-tax Act has a substantial interest exceeds five percent of capital of that concern---Meaning of expression "capital of that concern"--­Investment of funds in company---"Capital" would mean share capital--­Capital would not include assets or reserves of company---Indian Wealth Tax Act, 1957, Ss. 5 & 21A. Under section 5(1)(i) of the Wealth Tax Act, 1957, it is provided that wealth tax shall not be payable by an assessee in respect of any property held by him under trust or other legal obligation for any public purpose of a charitable or religious nature in India. Section 21A of the said Act, inter alia, provided that notwithstanding anything contained in clause (i) of sub­section (1) of section 5, where any property is held under trust for any public purpose of a charitable or religious nature in India, and any part of such property or the income of the trust is used or any part of the income of the trust created on or after April 1, 1962, enures for the benefit of any person referred to in subsection (3) of section 13 of the Income-tax Act, wealth tax shall be leviable upon and recoverable from the trustee or manager in the like manner and to the same extent as if the property was held by an individual who is a citizen of India and resident in India for the purposes of the Act at the rates specified therein: Under the second proviso to section 21A, it has been laid down that in a case where the aggregate of the funds of the trust invested in a concern in which any person referred to in subsection (3) of section 13 of the Income-tax Act has a substantial interest as provided in Explanation 3 to that section, does not exceed five percent. of the capital of that concern, the exemption under clause (i) of subsection (1) of section 5 shall not be denied in relation to any property other than such investment, by reason only that the funds of the trust have been invested in a concern in which any person referred to in subsection (3) of section 13 of the Income-tax Act, has such…

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