Hindu Undivided Family Denied Wealth-tax Act Exemption: Tribunal Rules Against Group Claim

The tribunal dismissed the appeal of a Hindu undivided family seeking exemption under section 5(1)(xxxiii) of the Wealth-tax Act for the assessment year 1985-86. The tribunal held that the exemption was available only to individuals, not Hindu undivided families, as the requirement of being a person of Indian origin could not be extended to a family entity. The tribunal emphasized that the criteria of 'ordinarily residing' in a foreign country applied to individual human beings, and therefore, the family could not claim the exemption based on the karta's status.

---

---

Issues:
- Claim for exemption under section 5(1)(xxxiii) of the Wealth-tax Act for the assessment year 1985-86.

Analysis:
1. The appeal was filed by the assessee against the order disallowing the claim for exemption under section 5(1)(xxxiii) of the Wealth-tax Act for the assessment year 1985-86. The assessee, a Hindu undivided family, claimed exemption based on the karta's status as a person ordinarily residing in a foreign country who had returned to India with the intention of permanently residing there. The Wealth-tax Officer disallowed the claim, which was confirmed by the Commissioner (Appeals), leading to the appeal before the tribunal.

2. The main issue in this appeal was whether the assessee, a Hindu undivided family, was entitled to exemption under section 5(1)(xxxiii) of the Wealth-tax Act. The contention of the assessee was that as long as the karta satisfied the criteria, the Hindu undivided family should also be deemed to be ordinarily residing abroad. However, the department argued that the provision applied only to individual human beings and not to Hindu undivided families. The tribunal had to determine whether the denial of the exemption by the authorities below was justified.

3. Section 5(1)(xxxiii) of the Wealth-tax Act provides for exemption for a person of Indian origin or a citizen of India who was ordinarily residing in a foreign country and returned to India with the intention of permanently residing there. The tribunal observed that the benefit under this section was available only to a person of Indian origin, and a Hindu undivided family did not satisfy the requirement of being a person of Indian origin as per the explanation provided in the Act.

4. The tribunal further analyzed the concept of 'ordinarily residing' in a foreign country as per the provisions of the Income-tax Act, which were incorporated into the Wealth-tax Act. It was noted that the term 'ordinarily residing' referred to physical residence, which only an individual human being could do. Therefore, a Hindu undivided family could not satisfy this requirement, and the exemption under section 5(1)(xxxiii) could only be claimed by a human being, not a Hindu undivided family. As a result, the appeal of the assessee was dismissed as the requirements of the section were not met by the Hindu undivided family.

5. In conclusion, the tribunal held that the claim for exemption under section 5(1)(xxxiii) of the Wealth-tax Act could not be allowed for a Hindu undivided family based on the karta's status as a person ordinarily residing in a foreign country. The tribunal emphasized that the satisfaction of the requirements of the section had to be considered with respect to the assessee, not the karta individually. Therefore, the appeal of the assessee was dismissed as the Hindu undivided family did not meet the conditions for claiming the exemption.

---