COMMISSIONER OF WEALTH TAX vs. K S LOKHANDWALA FAMILY TRUST

PDF · subscribers
WTR/1/1996HC GujaratGJHC24021931199608 November 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court declined to answer the question referred to it. The reasoning was that a similar issue concerning the same assets and assessment years under the Income-tax Act, 1961, had been restored to the Tribunal for fresh decision due to the need to ascertain proper facts. Therefore, the High Court held that the Wealth-tax reference should follow suit. The Tribunal was directed to decide the wealth-tax matter after rendering its decision in the income-tax matter for the same assessment years. The reference was disposed of accordingly, with no order as to costs. The specific finding on whether the wealth should be assessed on a substantive basis was not decided by the High Court.

What were the facts?

This case involves a reference under Section 27(1) of the Wealth-tax Act, 1957, made by the Income-tax Appellate Tribunal (ITAT), Ahmedabad Bench. The reference pertains to assessment years 1981-82 and 1983-84 to 1986-87. The Commissioner of Wealth Tax is the petitioner, and K S Lokhandwala Family Trust is the respondent-assessee. The ITAT had directed the Assessing Officer to assess the wealth of the assessee trust in its hands on a substantive basis. The High Court heard the revenue's counsel, but no one appeared for the assessee. The High Court noted a similar issue in an Income-tax Reference concerning the same assets and assessment years, where it had declined to answer the question and directed the ITAT to decide the matter afresh after ascertaining proper facts.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to assess the wealth of the assessee trust in its hands on a substantive basis? (Question of law and fact, concerning the assessment of wealth). Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The revenue, through its counsel Mr. BB Naik, appeared before the High Court. The judgment implies the revenue is challenging the ITAT's direction to assess wealth on a substantive basis. The revenue's argument is not explicitly detailed, but the context suggests they are seeking a different outcome than what the ITAT directed. Tribunal's Action: The ITAT had directed the Assessing Officer to assess the wealth of the assessee trust on a substantive basis.

Which sections of the Income-tax Act were involved?

Section 27(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

WEALTH TAX REFERENCE No 1 of 1996

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF WEALTH TAX Versus K S LOKHANDWALA FAMILY TRUST -------------------------------------------------------------- Appearance: 1. WEALTH TAX REFERENCE No. 1 of 1996 MR BB NAIK with MR MANISH R BHATT for Petitioner NOTICE SERVED for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE D.A.MEHTA

Date of decision: 08/11/2001

ORAL JUDGEMENT (Per : MR.JUSTICE M.S.SHAH)

In this reference under Section 27(1) of the Wealth-tax Act, 1957, the Income-tax Appellate Tribunal, Ahmedabad Bench has referred the following question for our opinion in respect of assessment years 1981-82, 1983-84 to 1986-87 :-

"Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to assess the wealth of the assessee trust in its hands on substantive basis ?"

2.

We have heard Mr BB Naik, learned counsel for the revenue. Though served, none appears for the respondent-assessee.

3.

In a reference being Income-tax Reference No. 165 of 1995 decided by us on 7.11.2001, the controversy under the Income-tax Act, 1961 was whether the income arising from the assets which were transferred, had to be taxed in the hands of the assessee trust on a substantive basis or on a protective basis. For the reasons stated in the said order, we have declined to answer the question referred to us and directed the Tribunal to decide the matter afresh after ascertain proper facts.

4.

The Tribunal has merely followed its own order in Income-tax proceedings. In view of this situation, once for the purpose of income-tax in relation to transfer of the same assets, the matter is restored to the Tribunal, the wealth-tax reference should follow suit. We, therefore, decline to answer the question referred to us in the present reference and the Tribunal shall decide the wealth-tax matter after rendering its decision in the income-tax matter for the same assessment years.

5.

The reference is disposed of accordingly with no order as to costs.

(M.S. Shah, J.) (D.A. Mehta, J.) sundar/-

More judgments on Section 27(1)

All 322 judgments and leading authorities on Section 27(1) →

Recent GST High Court judgments

Search GST case law →