ORDER
Hari Om Maratha, J M.
These three appeals by the department relate to assessment years 1988-89 to 1990-91 and arise out of the orders of the Commissioner of Wealth Tax (Appeals) dated 29-3-1994 and 12-9-1994 vide which he partly allowed the appeals of the assessee. These appeals can be conveniently disposed of by a common order. We are doing so.
2. Brief facts leading to these appeals are : the assessee had created four trusts for the benefit of his children. The assessee and his wife Smt. Tahera Mahmood Ali were the trustees of these trusts viz., (i) Masood & Masoom Benefit Trust, (ii) Latif Unnisa & Mansoor Trust, (iii) Manzoor Benefit Trust, and (iv) Masood and Magdoom Benefit Trust. These four trusts were created by the assessee by way of gifting Rs. 4,000 to the trusts and thereafter lending a sum of Rs. 4,24,481.50 to these trusts. Later-on, the assessee, acting as a trustee, purchased 85.65 acres of land from Shri A.P. Padmanabhan and others in 1970 out of the assets of these trusts. Ultimately, the assessee got converted the above land as ‘farm house layout’ and after getting permission to sell the lands to intending buyers sold the land in question.
3. The department got aggrieved by the order of the Commissioner of Wealth Tax (Appeals) and has filed these appeals before us. The main grievance of the department is that the creation of trusts is mere sham in order to avoid payment of tax and the value of the properties belonging to the trusts should have been included in the net wealth of the assessee.
4. The learned Departmental Representative vociferously submitted before us that the land in question was purchased by the assessee and as per sale agreement, the sale absolutely belonged to him and his wife and also that the lands having actually been utilised for himself, the value of the lands transferred by four trusts is includible in the net wealth of the assessee. He also submitted that the trusts are not assessed to income-tax and that the trusts are on papers only and all the transactions done by the assessee are the benami transactions. He has also drawn our attention to the sale deed that in those sale deeds, the assessee has shown himself to be the absolute owner of the land in question and thereby he has appropriated the proceeds of the sales to his personal use and that while getting permission to convert this farm house layout he has shown himself to be the absolute owner of the land in question Consequently, he has submitted that the effective owner of the land in question’, was the assessee himself and not the trusts and that in these circumstances it. was the assessee who should be liable to wealth-tax on these assets and not the trusts. On the other hand, the learned authorised representative has relied on the order of the Commissioner of Wealth Tax (Appeals) completely and has submitted that the land in question being the agricultural land, there was no need to file the returns so far as these lands are concerned. Moreover, he has refuted the contention of the learned Departmental Representative that the assessing officer did not give opportunity to the assessee to prove forming of the trusts. He has also drawn out attention to purchase deeds which have been placed before us that these properties were purchased long back and these were not included in the previous assessments by the assessing officer, and it was not questioned up to assessment year 1987-88. He has also refuted the contention of the learned Departmental Representative that the trusts are not assessed. He has given a written submission from which it is clear that the trusts are assessed to tax. On enquiry from the learned Departmental Representative, he has admitted this fact but he quickly added in his submission that this is the mistake committed by the department.
5. We have heard the rival submissions. We have perused the orders of the learned Commissioner of Wealth Tax (Appeals) on this point which is self-speaking, very considerate and elaborate one. We fall in line with this order of the learned Commissioner of Wealth Tax (Appeals) because the assessee happens to have control over the trust properties by virtue of the fact that he is a trustee, the beneficial ownership of the property cannot be passed on him. Perusal of the sale deeds in question which have been assailed by the learned Departmental Representative also do not go to prove the case of the department that the assessee has acted as an absolute owner of the properties in question, department cannot reap advantage out of its own mistakes which may have been committed by it. In view of the forgoing discussion, we are of the opinion that the properties in question are not the assets of the assessee and hence, we uphold the orders of the Commissioner of Wealth Tax (Appeals) on this point. This disposes of the ground raised by the department for the assessment years 1988-89 to 1990-91.
6. The next grievance of the department in relation to assessment years 1988-89 and 1989~90 is regarding allowance of liabilities to the extent of Rs. 14,20,000 and Rs. 25.25 lakhs for the assessment years in question. The learned Departmental Representative has submitted that the assessee had not disclosed these amounts in his bank accounts. The learned authorised representative of the other hand, has submitted that the amounts were never received by the assessee but were directly paid to Vijaya Bank and Income Tax Department for repayment of loan and for discharge of the assessee’s liabilities. The case of the department is that the assessee did not claim this fact at the time of the assessment. We are satisfied by the submissions made by the learned authorised representative coupled with the relevant papers which have been shown to us including the annexure to the assessing officer’s order at p. 12 of the paper book that the amounts in question were actually never received by the assessee but were used to discharge the assessee’s liabilities towards income-tax and towards repayment of the loan to Vijaya Bank. We find further support from the submission of the learned authorised representative that there was a condition precedent laid down by the Income Tax authority and Vijaya Bank at the time of sale of the property in question that the payment shall be made directly to them for the discharge of the liability of the assessee and not to the assessee. For the above reasons, we uphold the orders of the Commissioner of Wealth Tax (Appeals) and reject the ground of appeal as put forth by the department.
7. The next ground of appeal as put forth by the department for the assessment year ‘1988-89 and 1989-90 relates to the value of the house situated at Andheri in Mumbai. The assessee had made a claim for exemption under section 5(1)(iv) of the Wealth Tax Act, 1957 in respect of a flat at Andheri, Mumbai which was allowed by the Commissioner of Wealth Tax (Appeals) on appeal. We do not find anything wrong with the decision of the Commissioner of Wealth Tax (Appeals) and we uphold his order on this point as the provisions of section 5(1)(iv) are very clear and unambiguous.
8. In the result, all the appeals are dismissed.