1983 (1) TMI 170

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....lity while computing the net wealth of the assessee-trust. The aforesaid appeals involve a common issue and are, therefore, heard together and disposed of by a common consolidated order for the sake of convenience. 2. In all the aforesaid appeals the WTO taxed net wealth of the assessee-trust which was held to be a private discretionary trust by applying provisions of section 21(4) of the Wealth-tax Act, 1957 (' the Act '). While doing so, the WTO refused to exclude from the corpus or the assets held by the trust as on valuation date, the amounts which had been distributed to the various beneficiaries during the year out of the income of the trust and credited to their respective accounts. The reason given for the same by the WTO in the as....

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....iary, there will be a single assessment in the hands of the trustee as a representative assessee with respect to assets held for that beneficiary. When there are several beneficiaries there will be several assessments, in the hands of the same trustee with reference to the several beneficiaries. Sub-clause (4) of section 21 provides through a fiction of law that when the shares of the beneficiaries in the corpus of the trust are indeterminate or unknown, wealth-tax will be levied on the trustee as if the persons on whose behalf or for whose benefit the assets are held were an individual, by application of rates mentioned in that sub-section. This is a case which is different from normal assessment of the trust provided in section 21(1). The....

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....l come to play in the case of discretionary trust. Sub-section (4) of section 21 provides that when the shares of the beneficiaries in the corpus of the trust are indeterminate or unknown, wealth-tax will be levied on the trustee as if the person on whose behalf or for whose benefit the assets are held were an individual, by application of rates mentioned in that sub-section. Under section 21(1) all the beneficiaries are assessed through the medium of the trustee and there will be as many assessments equal to the number of beneficiaries. In that case as argued by the WTO, the liabilities to the beneficiaries will not be real liability and the aforesaid liability cannot be deductible from the net wealth of the trust. But in the case under se....