Commissioner Of Wealth-Tax vs Eternal Science And Man'S Society
2006 Latest Caselaw 1106 Del

JUDGMENT

1. In this reference under Section 27(1) of the Wealth-tax Act, 1957, the following question of law has been referred for our opinion:

Whether, on the facts and circumstances of the case, the Tribunal was right in holding that 50,000 shares of Motor and General Finance Ltd. are not 'invested' in a concern, in which any person referred to in Sub-section (3) of Section 13 of the Income-tax Act, 1961, has substantial interest as provided in Explanation 3 thereof?

2. Some of the trustees of the assessed were directors of a company called Motor and General Finance Ltd. It appears that these persons were also trustees in some other trusts such as Daulat Ram Central Education Society and Daulat Ram Public Mission, etc. (compendiously called as Daulat Ram Trusts).

3. The Daulat Ram Trusts donated 50,000 shares held by them in Motor and General Finance Ltd., to the assessed.

4. The Wealth-tax Officer was of the view that the shares received by the assessed were in fact investments made by the trustees and, therefore, they were not entitled to the benefit of Section 13(2) (h) read with Section 13(3) of the Income-tax Act, as applicable to the Wealth-tax Act. This view of the Assessing Officer was not upheld by the Commissioner of Wealth-tax and also by the Income-tax Appellate Tribunal.

5. Under the circumstances, the above question of law has been referred for our opinion under Section 27(1) of the Wealth-tax Act.

6. It has been brought to our notice that this Court in CIT v. Sir Sobha Singh Public Charitable Trust [2001] 250ITR 475 dealt with a similar issue. In that case, one of the trustees of the assessed (Sir Sobha Singh) donated 1,500 shares in a company and 2,000 shares in another company to the assessed trust. This Court came to the conclusion that the shares received by the assessed were not investments made by it in those companies in which the donor had a substantial interest and, therefore, the assessed was entitled to the benefit of Section 13(2)(h) read with Section 13(3) of the Income-tax Act.

7. On a reading of the aforesaid judgment, we note that a similar issue had arisen before some other High Courts including before the Calcutta High Court in CIT v. Birla Charity Trust in which the same view was taken.

8. Having heard learned Counsel for the parties, we are of the opinion that there is no occasion for us to take a different view from what has already been taken by this court.

9. Under the circumstances, the question is answered in the affirmative and in favor of the assessed. The reference is disposed of accordingly.