Representative trust wealth-tax liability does not arise where net wealth stays below the statutory exemption limit.

A discretionary trust assessed as a representative assessee under section 21(4) of the Wealth-tax Act was not liable to wealth-tax where its net wealth remained below the statutory exemption limit. Section 3, read with Schedule I, levies tax only when net wealth exceeds the prescribed threshold, and section 21(4) applies only in the same manner and extent as assessment of an individual. The higher rate under clause (b) becomes relevant only when tax is otherwise payable, so the individual exemption is preserved for the trust. The statutory language was treated as plain and unambiguous, and extrinsic aids could not extend liability beyond the text.

---

---

Issues: Whether a discretionary trust assessed under section 21(4) of the Wealth-tax Act, 1957, is liable to wealth-tax when its net wealth is below the statutory exemption limit.

Analysis: Section 3 of the Wealth-tax Act, 1957, read with Schedule I, levies wealth-tax only when net wealth exceeds the prescribed exemption limit. Section 21(4) applies to representative assessees where beneficiaries' shares are indeterminate or unknown and provides that wealth-tax shall be levied and recovered in the like manner and to the same extent as from an individual, with the higher rate under clause (b) becoming relevant only where tax is otherwise payable. The exemption available to an individual is therefore preserved for a representative assessee, and the question of applying the higher rate does not arise where the net wealth is within the exempted limit. The language of the provision was treated as plain and unambiguous, leaving no scope to rely on budget speech or administrative explanation to extend liability beyond the statute.

Conclusion: The trust was not liable to wealth-tax, because its net wealth fell below the statutory limit and section 21(4) did not displace the exemption.

---