JUDGMENT
By The Court:
Heard learned counsel for the applicant. This is an application under section 27(3) of the Wealth Tax Act, 1957, for requiring the Tribunal, Jodhpur Bench, Jodhpur to submit the statement of case and refer the questions of law said to be arising out the Tribunal’s order, dated 25-3-1998.
The application under section 27(1) moved before the Tribunal has been rejected on the ground that no referable questions of law arise out of its appellant order. The proceedings have been initiated against the respondent H.H. Rajdadi Smt. Badan Kanwar Medical Trust in pursuance of the order under section 25(2) of the Wealth Tax Act passed by the CWT and assessment was made on the trust under section 16(3) by the assessing authority by issuing notice to it through its trustees.
On appeal the Commissioner of Wealth Tax (Appeals) quashed the assessment orders on the ground that trust was not assessable entity under the Wealth Tax Act, against which no proceeding could have been initiated. If at all, the assessment could have been made under section 21 of the Wealth Tax Act as a representative of those, on whose behalf or for whose benefit the assets are held by it, if wealth tax was otherwise leviable on such beneficiaries for whose benefit such property is held by them in trust to the extent value of asset represent concerned beneficiary’s interest.
This order was appealed against by the department and cross-objections were also taken by the assessee. The same were dismissed by the Tribunal by finding that trust itself is not assessable entity at all under section 3 of the Wealth Tax Act and, therefore, notices issued to the trust for the purposes of assessing the trust as an assessable entity was invalid and no proceedings could have been initiated against it. Thus, finding the initiation of proceedings to be invalid, order of CWT(A) was maintained.
2. The revenue had relied on section 21A for the purpose of sustaining the assessment. The Tribunal repealed that contention. It held that in that event notices were required to be issued to representative trustee who fell in the category against whom the assessment could be proceeded under section 21A of the Act on fulfilment of the conditions. Said provision does not authorise levy of the tax on the trust as such.
It is in the aforesaid facts and circumstances the department has made application under section 27(1) before the Tribunal for submitting the questions of law which according to it arose out of the Tribunal’s order. Same has been rejected by holding that answer to the question that no person other than a firm or individual, HUF or company can be assessed under the Wealth Tax Act is obvious and stand concluded by decision of Supreme Court, no question of law which is required to be referred to the High Court for its opinion arose out of its order.
3. Having heard learned counsel for the applicant we are of the opinion that though the questions sought to be raised are questions of law but answer being self-evident and the consideration of the questions on merit being academic this court would not direct the Tribunal to submit the statement case for answering those questions.
Section 3 of the Wealth Tax Act is clear in its term which is a charging section that the only entities recognized for the purpose of assessment under the wealth-tax as an assessee are the ‘individual’, ‘the HUF and ‘the company’. No other entity has been recognized for the purpose of assessment of wealth under the Act.
4. In this connection we may also refer to the decision of the Hon’ble Supreme Court referred in CWT v. Ellis Bridge Gymkhana & Ors. (1998) 229 ITR 1 (SC) wherein the court unequivocably said that :
“The rule of construction of a charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section. No one can be taxed by implication. A charging section has to be construed strictly. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all ……..”
Referring the phraseology used in cognate taxing statutes like Indian Income Tax Act, 1922 and GT Act, 1958 and existing decided cases considering the charging sections of Indian Income Tax Act, 1922, the court said :
“When the Wealth Tax Act, 1957 was passed the legislature decided to specify only ‘Individual, HUF and company’, as units of assessment. It will not be right to presume that legislative was unaware of wordings of the charging provisions of Indian Income Tax Act, 1922, when the Wealth Tax Act was enacted. The legislature must be presumed to have known the large numbers of cases that where heard and decided on the scope of charging section under the Indian Income Tax Act and meaning subscribed to ‘association of persons’ therein. The legislature, however, decided to exclude ‘firm’, ‘association of persons’ and ‘body of individual’ from the ambit of the charge of wealth-tax. What has been specifically left out by the legislature cannot be brought back within the ambit of the charging section by implication or by ascribing an extended meaning to the word ‘individual’ so as to include whatever has been left out.”
The court further explained the importance of insertion of section 21AA in CWT v. Ellis Bridge Gymkhana (supra), which permitted assessment of AOP or BOI which made it possible to tax an AOP or BOI only when the ‘individual’ member of association of person or BOI is known but his share in the assets held by association of person or BOI is not determinable but not otherwise.
“In our view, section 21AA far from helping the case of the revenue directly goes against its contention. An AOP cannot be taxed at all under section 3 of the Act. That is why an amendment was necessary to be made by the Finance Act, 1981, whereby section 21AA was inserted to bring to tax net wealth of an AOP where individual shares of the members of the association were unknown or indeterminate.”
5. The trust as such is not an assessable entity. The trust is not a juristic person nor does it exist as an assessable entity against which any proceedings could be initiated or installed for the purpose of assessment. The only provision on the basis of which even notices to assessee could be issued to any person are under section 21 or 21A, or 21AA.
6. Section 21 envisages assessment of the share of beneficiary to be assessed in the hands of the court of Ward administrator or the trustee discharging that trust. This obviously is not at all the case of the revenue, that the notices have been issued to the body of trustees to be assessed in respect of the interest of the beneficiary concerned for whose benefit the trust was being discharged and obviously this being a public trust it could not have been subject to section 21. Section 21 in very nature of this is not attracted inasmuch as for the applicability of section 21 the beneficial ownership must vest in individual, HUF or company. In essence under section 21 the assessment in the hands of trust is in respect of taxable wealth administered by it for an individual, an HUF or a company, but not in respect of a body of persons of indefinite composition, which is not at all taxable entity under the Act under section 3 in view of the clear pronouncement of Apex Court.
7. Section 21A speaks of the individual liability of the trustees to be assessed in respect of that part of the asset or income which is diverted for their own purposes. This also does not involve any notice to the trust or the trustees in a representative capacity. In no circumstance it is possible to upheld the assessment of wealth-tax on entire corpus of assets held in trust as a taxable wealth whether in the name of trust or in the collective body of the trustees, except under section 21AA.
It is also not a case of revenue that the trust is being assessed under section 21AA, which the individuals or beneficiaries are identifiable but their share in net assets is not determinable or indeterminate so as to make it possible to assess the trust or trustees as an association of person or BOI.
The answer being self-evident, we are not inclined to entertain this application. Accordingly the same is rejected.
OPEN