Judgment:
K.L. Manjunath, J.
1. This appeal is by the revenue challenging the concurrent findings of the Commissioner of Wealth-tax (Appeals)-II, Bangalore which has been confirmed by the Income-tax Appellate Tribunal, Bangalore Bench in WTA 44/Bang./2002 raising the following substantial questions of law:
1. Whether the appellate authorities were correct in holding that the assessee's share in the Body of Individuals in which he was a member cannot be brought to Wealth Tax as his share was not determinate on the valuation date?
2. Whether the interest held by the assessee in a body of individuals can be brought to wealth tax in accordance with Rules 15 and 16 to 20 of III Schedule to the Wealth-tax Act read with Section 4(1)(a) of the Wealth-tax Act especially when the Hon'ble Supreme Court in Meera and Company v. CIT : 224 ITR 635 has held that Association of Persons' and 'Body of Individuals' is not something distinct and separate, but, is a composite unit liable to tax?
3. Whether the appellate authorities were correct in reopening assessment under Section 17 of the Wealth-tax Act and bringing to tax the respective share held by the assessee in each of the 'Body of Individuals' based on the share each individual received at the time of its disruption as on 12-9-1993?
2. Though three questions of law are framed in the appeal memo, at the time of arguments counsel for the parties request the court to re-frame the questions of law as hereunder:
1. Whether the authorities below were justified in holding that the assets in the hands of 'Body of Individuals' cannot be brought into account of the assessee under the provisions of the Wealth-tax Act?
2. Whether the interest held by the assessee in the 'Body of Individuals' can be brought to wealth tax in his individual capacity or must be assessed as 'Body of Individuals'?
3. We have heard the counsel for the parties.
4. The assessee filed return of wealth for the relevant assessment year. The same was processed under Section 16(3) of the Wealth-tax Act. Assessing Officer noticed that the assessee was a member of number of Body of Individuals under a Trust Deed and that his interest in the properties of Body of Individuals has not been accounted for the purpose of wealth tax in the return filed by the assessee. It was also noticed by the Assessing Officer that Body of Individuals in which assessee was a member was dissolved on 12-9-1993. The respective shares of the assessee on dissolution of these Body of Individuals was considered for computation of share and therefore the Assessing Officer passed an order computing wealth tax including the share of the assessee under the Body of Individuals. This order was questioned by the assessee by filing an appeal before the Commissioner of Wealth Tax on the ground that the assessee did not had any definite share in the Body of Individuals and that the order of assessment was bad in law. Commissioner of Appeals after hearing the parties held that in terms of the trust dead wherein the assessee is a member of several Body of Individuals, share of the assessee was undeterminable and cannot be assessed to wealth tax in respect of the assessee's interest in the Body of Individuals. Accordingly, the order of the Assessing Officer was set aside and the appeal was allowed. Aggrieved by the order passed by the Commissioner of Wealth-tax Appeals, revenue filed an appeal before the Income-tax Appellate Tribunal. The Tribunal relying upon the trust deed produced by the parties held that there are 10 sets of Body of Individuals and that the person's constituting respective Body of Individuals were alone beneficiaries under the trust deed and that the shares of each of the beneficiaries is neither determinate nor specific and that they are variable and further held that the only surviving beneficiaries on that date of revocation of the trust deed are entitled to share. Therefore, accepting the findings of the Wealth-tax Commissioner, dismissed the appeal. Being aggrieved by the concurrent findings, present appeal is filed by the revenue.
5. Learned Counsel for the revenue contends that the authorities below did not consider that each Body of Individuals are entitled to 1 /10th share in the property under the trust deed and similarly each Body of Individuals were entitled to 1/10th of the income every year and that each Body of Individual consisting of three persons, assessee being a member of several Body of Individuals had a definite share in that particular year of assessment. Therefore, order of the Tribunal and the Commissioner of Wealth Tax are to be set aside. He further contends that share of individual assessee was determinable and that such assessee had a definite share in the property of the Trust and that the assessee was required to declare the value of the share in the wealth tax returns. To support his arguments, he has relied upon the judgment of Allahabad High Court in CWT v. J.K. Srivastava : [2006] 280 ITR 470 and relying upon the judgments of Supreme Court in CIT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth Trust) : [1977] 108 ITR 555 contends that the assessee has to be assessed under the wealth tax in respect of the share held by him in the trust. Therefore, he requests the court to allow the appeal. Per contra, counsel for the assessee contends that either the judgment of Allahabad High Court or the judgment of Hon'ble Supreme Court are not applicable to the facts and circumstances of the case. According to him, in case of J.K. Srivastava (supra) property was gifted to a father and son and each of them had a definite share in the property gifted to them and that the share of son and father could be ascertained in the absence of any specific terms and conditions under the Gift Deed. Therefore, their Lordships of Allahabad High Court have held that each of them had a definite share and such share can be brought into Wealth Tax and that the judgment of the Supreme Court in Trustees of H.E.H. Nizam's Family (Remainder Wealth Trust) case (supra) trustees were assessed on behalf of the trust. Therefore, said judgment cannot be considered by this Court while considering the facts of this case. According to him, under the Trust Deed certain assets were given to 10 beneficiaries viz., 10 Body of Individuals consist of three members and some of the members in one Body of Individuals were also members in the other Body of Individuals and the annual income had to be distributed among 10 Body of Individuals and such individual Body of Individuals are to be assessed separately under the provisions of the Income-tax Act. He further contends that in terms of the Trust Deed no individual member of Body of Individuals have got any definite share in the assets of the Trust and for any reason during the subsistence of the Trust if a beneficiary were to die, his legal representative cannot claim any share in such assets, only the surviving members of the Body of Individuals alone is entitled to claim the share. Therefore, considering the terms and conditions of the Trust, Commissioner of Wealth Tax as well as the Tribunal have come to the conclusion that the share of the assessee was not determinable under the Trust Deed and therefore assessee could not have included the assets of the Trust determining his share while filing the return under the provisions of the Wealth-tax Act. He further contends that since facts involved in this case are not disputed by the revenue, Commissioner of Wealth Tax as well as the Tribunal have come to the conclusion that the assessee in her individual capacity could not have included undeterminable share in the wealth tax return. Therefore, he requests the court to dismiss the appeal.
6. Having heard the counsel for the parties, though two questions of law are framed by us, virtually both the questions of law are to be treated as one question and if we are of the opinion that the assessee herein had a definite share which can be ascertained and can be brought into provisions of the Wealth Tax, findings of the Tribunal and the Commissioner of Wealth Tax are to be set aside and if the share of the assessee cannot be determined in terms of the trust deed, then assessee cannot be directed to declare the undetermined share in the return filed under the provisions of the Wealth-tax Act.
7. We have examined the Trust Deed. From the perusal of the trust deed, it is clear that there are 10 Body of Individuals. Each such Body of Individual is entitled to 10 per cent of the assets and income from such assets of the trust. Each Body of Individual have declared income separately under the provisions of the Income-tax Act. According to the terms and conditions of the Trust Deed, there is no definite share given to any individual beneficiary, the beneficiaries are 10 Body of Individuals and each Body of Individual consist of 3 individual persons and during their life time and as long as the trust deed is not revoked or dissolved no individual person can claim any share so also any Body of Individual. The only surviving members of the Body of Individuals on determination of the Trust Deed are entitled to claim share which share has to be determined considering the total number of beneficiaries alive on the date of dissolution of the Deed which Deed has been dissolved on 12-9-1993. Therefore, prior to 12-9-1993 no individual beneficiary can claim any definite share in the trust property. In the circumstances, we are of the opinion that the Tribunal as well as the Commissioner of Wealth Tax were justified in holding that the assessee cannot be directed to include assets of the trust for computing wealth tax in his individual capacity. Accordingly, we have to answer the question of law framed in this appeal against the revenue and in favour of the assessee.
8. Accordingly, this appeal is dismissed.