Law:

Section:

Section 4, read with section 27, of the Wealth-tax Act, 1957 - Deemed wealth- Assessee, a beneficiary of main trust, assigned share income from a firm to trust - Same along with other income of trust was distributed among all beneficiaries - Beneficiaries, in turn, assigned their respective interest in favour of BOI and claimed that beneficial interest derived from firm should be assessed as assets of BOI - Whether where Commissioner (Appeals) and Tribunal found that creation of BOI and assignment of assets was not sham and bogus activity, no question of law arose from Tribunal's order directing Assessing Officer to exclude value of assets transferred to BOI from wealth of assessee - Held, yes FACTS The respondent-assessee was a beneficiary of the main trust. A sum, being the share of income from the partnership firm, was assigned to the trust by the assessee. The same, along with other income of the trust, was distributed among all the beneficiaries, including the assessee. They, in turn, assigned their respective interest in favour of BOI and claimed that the beneficial interest derived from the firm should be assessed as assets of the BOI for purposes of valuation and not as the assets of the respondent-assessee. The WTO rejected the assessee's claim holding that creation of BOI and assignment was a sham and bogus transaction. The Commissioner (Appeals) reversed the findings of the WTO and the same was upheld by the Tribunal. The Tribunal further declined to refer the case to the High Court under section 27(1). On application under section 27(3), the High Court affirmed the order of the Tribunal. On appeal : HELD Once it was found, as a fact, that the creation of the BOI and assignment of assets was not sham and bogus activity, the question sought to be referred would not arise and, therefore, the Tribunal under section 27(1) and the High Court under section 27(3) were right in rejecting the application of the revenue. CASE REVIEW Decision of the Gujarat High Court in the case of CWT v. Lov. S. Kinariwala [WT Appeal No. 52 of 1998, dated 13-4-1999] affirmed . CASES REFERRED TO Sunil J. Kinariwala v. CIT [1995] 211 ITR 127/[1994] 76 Taxman 101 (Guj.), CIT v.…

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