Law: Wealth Tax Act, 1957

Section: 5(l)(i)

Wealth tax- -----Exemption---Charitable trust-Condition precedent-Property must be utilised primarily for charitable pr religious purpose---Interpretation of trust deed by Supreme Court to Income-tax proceedings must be taken into account-- Property which could be -used for social, cultural and allied purposes at sole discretion of trustee----Decision of Supreme Court in income-tax proceedings that trust was not charitable---Trust not entitled to exemption from wealth tax---Indian Income Tax Act, 1961, S.1 1 ---Indian Wealth 'Fax Act, 1957, S..5(1)(i). In order to claim the benefit of section 5(1) of the Wealth Tax Act, 1957, it must lie demonstrated feat., (i) tire property is held by the assessee under a trust or other legal obligation; (ii) the purpose for which it is held is a public purpose; (iii) such public purpose is of a charitable and religious nature, in India. The focus in section 5 of the Wealth Tax Act is the property and as long, as the property is held in the character mentioned therein, exemption can be claimed. It is quite conceivable that a trust which leas many purposes, also owns several properties some of which may be burdened for use solely for religious or charitable purposes, while others may not be. Exemption cannot be denied on the ground that the objects of the trust are not predominantly religious -and charitable. The claim made, under the Wealth Tax Act must be decided in terms of the provisions ref that Act arid not in terms of the Income-tax Act. However, the construction of glee trust deed by the Supreme Court is very relevant for the purpose of considering the nature arid effect of the document, and it has to be looked into and relied upon for the purpose of deciding as to whether the terms of that document are such as to permit a claim being made in terms of section 5(1) of the Wealth Tax Act, for exemption. Though the focus of enquiry for the purpose of exemption froth wealth tax under section 5(1), is not the owner but the property, it must be shown that the property is burdened with an obligation to be utilised primarily for charitable or religious purposes. If under the terms of the document under which the property is…

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