Commissioner of Wealth-tax vs M.K. Chandrakanth

N.V. Balasubramanian, J.—At the instance of the Department, the Income Tax Appellate Tribunal, has stated a case and referred the

following common question of law u/s 27(1) of the Wealth-tax Act, 1957, for our opinion :

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the contributions made by the

assessee to the trusts should not be included in the net wealth u/s 4(1)(a) of the Wealth-tax Act, 1957 ?

The assessee is an individual. He transferred certain amounts to M. C. Shyamala Marriage Benefit Trust and M. C. Sowmyaram Marriage

Benefit Trust. The Wealth-tax Officer in the assessment proceedings for the assessment years 1980-81 and 1981-82 held that the trusts were

revocable trusts and, therefore, the amount transferred should be included u/s 4(1)(a)(iv) of the Wealth-tax Act and made additions of Rs.

1,43,960 and Rs. 1,69,873 respectively for the assessment years 1980-81 and 1981-82.

The Commissioner of Wealth-tax (Appeals) following an earlier order of the Tribunal in the assessee''s own case held that the trusts were

irrevocable trusts and, therefore, the provisions of section 4(1)(a)(iv) of the Act cannot be applied. The Appellate Tribunal on appeal by the

Revenue, also confirmed the order of the Commissioner of Wealth-tax (Appeals). It is this order of the Appellate Tribunal that is the subject-

matter of this tax case.

Mr. C. V. Rajan, learned counsel for the Revenue, brought to our notice the decision of this court in the case of Commissioner of Income Tax

Vs. M.K. Chandrakanth, , wherein this court considered the relevant terms of the deeds of trusts both of the M. C. Shyamala Marriage Benefit

Trust and M. C. Sowmyaram Marriage Benefit Trust and held that the trusts are irrevocable trusts. Though the decision was rendered under the

provisions of the Income Tax Act, the principles laid down in the said decision would be equally applicable for consideration of the question under

the Wealth-tax Act. Since this court has already held that the trusts are irrevocable trusts, we are of the view that the provisions of section 4(1)(a)

(iv) of the Wealth-tax Act cannot be applied and the Tribunal has come to the correct conclusion in holding that the contributions made by the

assessee to the trusts cannot be included in the assessment years 1980-81 and 1981-82. We hold that there is no infirmity in the order of the

Appellate Tribunal, and, accordingly, we answer the common question of law referred to us in the affirmative and against the Revenue. No costs.