COMMISSIONER OF WEALTH-TAX vs. AMBALAL SARABHAI T.

WTR/27/1987HC GujaratGJHC24012203198725 October 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
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What did the High Court hold?

The Gujarat High Court held that the Tribunal was correct in its decision. The Court noted the undisputed position that both respondent-assessees had been declared public charitable trusts under the Income-tax Act, 1961. Following its own prior decision in Wealth Tax Reference No. 26 of 1985, the Court affirmed that the statutory scheme of the Wealth Tax Act, in conjunction with the Income Tax Act, requires that a trust recognized as a public charitable trust under the Income Tax Act is also to be treated as such for the purposes of Section 5 of the Wealth-tax Act. Therefore, the trusts were indeed entitled to exemption under Section 5(1)(i) of the Wealth-tax Act, 1957. The question referred to the Court was answered in the affirmative, in favour of the assessees and against the revenue. The references were disposed of accordingly.

What were the facts?

The Gujarat High Court was hearing two Wealth Tax References, Nos. 27 and 27-A of 1987, concerning Ambalal Sarabhai Trust No. 2 and Ambalal Sarabhai Trust No. 16, respectively. The references were made by the Income Tax Appellate Tribunal, Ahmedabad. The assessment year for Trust No. 2 was 1975-76, and for Trust No. 16, it was 1974-75. The core issue revolved around the entitlement of these trusts to exemption under Section 5(1)(i) of the Wealth-tax Act, 1957. The Tribunal had previously ruled in favour of the assessees, following its own orders for earlier years.

What were the issues?

1. Whether the Appellate Tribunal was right in law and on facts in holding that the assessee, being a public charitable trust, is entitled to exemption under section 5(1)(i) of the Wealth-tax Act, 1957? Assessee's Contentions: The assessees argued that since they were already held to be public charitable trusts under the Income-tax Act, 1961, they should also be considered as such under the Wealth-tax Act. They relied on this Court's decision in Wealth Tax Reference No. 26 of 1985, which held that the statutory scheme of the Wealth Tax Act read with the Income Tax Act mandates that a trust recognized as a public charitable trust under the Income Tax Act must also be treated as such under Section 5 of the Wealth-tax Act. Revenue's Contentions: The revenue did not record any specific arguments against the assessees' claim in the judgment. The judgment notes that Mr. B.B. Naik, learned counsel for the applicant-revenue, was heard, but his specific arguments are not detailed.

Which sections of the Income-tax Act were involved?

Section 5(1)(i),Section 5

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

WEALTH TAX REFERENCE Nos 27 and 27-A of 1987

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

The order continues below.

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