Law: Wealth Tax Act, 1957

Section: 5(1)(i)

Law: Income Tax Act, 1922

Section: 4(3)(i)

Wealth tax--- ----Exemption---Property held on trust for religious or charitable purposes--­Tribunal finding that objects of assessee-trust predominantly charitable and religious in nature---Entire property of trust exempt from wealth tax though only 60 percent. of income of trust spent for charitable and religious purposes---Difference between provision in Income-tax Act and Wealth Tax Act-.--Indian Wealth Tax Act, 1957,S. 5(1)(i). As per the deed of the assessee-trust, 60 percent. of the income of the trust was to be spent for charitable and religious purposes and the remaining 40 percent. was to be spent for the descendants of the settlor for a period of 20 years and thereafter, the entire income was to be utilised for charitable purposes. All the relevant assessment years fell during the interregnum period of 20 years, which expired on January 30, 1964. During the relevant assessment years, the assessee-trust claimed exemption under section 5(1)(i) of the Wealth Tax Act,1957, in respect of the properties held under trust. The Wealth Tax Officer took the view that inasmuch as only 60 percent. of the total income was to be spent for charitable and religious purposes, for the purposes of wealth tax, the property belonging to the trust would be treated to have been held for charitable and religious purposes only to that extent and the remaining part of the property would be assessed to wealth tax. The Wealth Tax Officer apportioned the property and brought the part of the property to. the extent of 40 percent. to wealth tax for the relevant assessment years. On appeal, the Appellate Assistant Commissioner held that the entire property was exempt from wealth tax. On further appeal, the Tribunal held that unlike the provisions of the Income-tax Act, for the purposes of wealth tax the entire property held by the trust had to be treated as exempt from tax under section 5(1)(i), if the predominant object of the trust was charitable and religious in nature and since the predominant object of the assessee-trust was charitable and religious in nature, the assessee-trust was entitled to exemption in respect of the whole property and not to the extent of 60 percent only.…

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