Law: Wealth Tax Act, 1957

Section: 27(1)

Wealth tax------Charge of tax---Minor---Trust created for benefit of minor---Income of trust to be accumulated and handed over to minor on her attaining majority--­Income from trust held not to be assessable in the hands of minor in income­tax proceedings---Interest of minor in trust was contingent---Capital of trust was not includible in her net wealth---Indian Wealth Tax Act, 1957. The assessee was an individual and she was the beneficiary of a trust known as "Baby Sitalakshmi Trust". As per the terms of the trust, the income was to be accumulated year after year and should be handed over to the beneficiary only on her attaining the age of 18. She became a major only in June, 1983. For the assessment year 1979-80 it was contended on behalf of the assessee that the amount standing to the credit of the trust, could not be treated as part of net wealth of the assessee. The Wealth Tax Officer, held that only the enjoyment was postponed, but there was a vested interest in favour of the assessee. Therefore, he included the capital of Baby Sitalakshmi Trust in the net wealth of the assessee. The Tribunal, however, held that the amount was not includible in her net wealth. On a reference: Held, that the Court in the case of the same trust in CIT v. Sitalakshmi (minor) (1996) 217 ITR 595 (Mad.), held that till the assessee attained the age of 18 years, the trust income would not be taxed in her hands. This decision would apply to this case under the Wealth Tax Act, as the interest of the assessee in the trust was only a contingent interest. The Appellate Tribunal was right in law in holding that the capital of the Baby Sitalakshmi Trust should not be included in the net wealth of the assessee. CIT v. Sitalakshmi (minor) (1996) 217 ITR 595 (Mad.) applied. JUDGMENT N. V. BALASUBRAMANIAN, J.---At the instance of the Commissioner of Wealth Tax, Madurai, the Income-tax Appellate Tribunal, Madras Bench "D", has stated a case and referred the following question of law for the assessment year 1979-80 under section 27(1) of the Wealth Tax Act, 1957, for our consideration: "(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law…

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