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Wular Trust, Tista Trust, Sahyadri Trust, Himalaya Trust, Vindhya Trust, Vihar Trust, Tulsi Trust, Vaitarna Trust, Dal Trust, Pawai Trust, Tansa Trust, Gopuri Trust Versus Additional Director of Wealth Tax (Exemp.) And Others

Entitlement to exemption under Section 5 (1) (i) of WT Act - Non filing of wealth tax returns - entitlement to Section 11 - Held that:- It appears to the Court that the Petitioner is not entitled to any reliefs as claimed in the petition. Under the Finance (No. 2) Act of 1991, an amendment was brought about in Section 13 (1) (d) of the IT Act whereby clause (iia) was inserted in the proviso with retrospective effect from 1st April 1983 which provided that for a charitable trust to retain its exe .....

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he Petitioner did not file a wealth tax return. The Respondent is right in contending that there was no valid reason given by the Petitioner in not filing the wealth tax return within the stipulated time when it had filed its income tax return on 28th June 1991 and a revised return on 18th January 1992.

As rightly pointed out by Mr. Manchanda, learned Senior standing counsel for the Revenue, the conduct of the Petitioner in filing the wealth tax return belatedly and much after the dat .....

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dhar And Vibhu Bakhru, JJ. For the Appellant : Mr Kailash Vasdev, Senior Advocate with Ms Bindu Saxena, Ms Aparajita Swarup, Mr K.K. Patra and Mr Dhruv Saxena, Advocates For the Respondent : Mr Ashok K. Manchanda, Senior Standing Counsel for Income Tax Department. W.P.(C) 2304/2001 & CM 3998/2001, W.P.(C) 2305/2001, W.P.(C) 2306/2001, W.P.(C) 2307/2001 & CM 4001/2001, W.P.(C) 2308/2001 & CM 4002/2001, W.P.(C) 2308/2001 & CM 4002/2001, W.P.(C) 2310/2001, W.P.(C) 2311/2001, W.P.(C) .....

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) of the Wealth Tax Act, 1957 ( WT Act ) for claim of refund of the wealth tax payment on the ground that Petitioners were not entitled to exemption. 2. The facts in all these petitions are more or less similar. Illustratively, the facts in Writ Petition (Civil) 2303 of 2001 are discussed in detail. 3. The Petitioner in W.P. (C) No. 2303 of 2001, Wular Trust, was formed on 12th November 1987. It obtained registration as a charitable trust under Section 12A (a) of the Income Tax Act, 1961 ( IT Ac .....

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the Finance (No. 2) Act, 1991 in the proviso to Section 13 (1) (d) of the IT Act with retrospective effect from 1st April 1983 which stated that where an asset other than an investment or deposit mentioned in Section 11 (5) is held by the trust or institution, such asset is required to be disinvested after the expiry of one year from the end of the previous year in which such asset is acquired or 31st March 1992, whichever is later. This outer time limit within which such disinvestment was to ta .....

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titioner was also required to file its return of net wealth for AY 1991-92 by 30th June 1991. However, by notification dated 19th June 1991, the time limit prescribed for filing such return under Section 139 of the IT Act was extended upto 31st October 1991. Accordingly, the due date for filing the wealth tax return under Section 14 (1) of the WT Act for AY 1991-92 stood extended upto 31st October 1991. 7. The Petitioner states that in view of the amendment in Section 13 (1) (d) of the IT Act, i .....

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claimed that it was subsequently advised that consequent to the amendment by which Clause 2 (iia) was inserted in the proviso under Section 13 (1) (d) with retrospective effect from 1st April 1983, it could not presume to be exempt from having to pay wealth tax in terms of Section 5 (1) (i) of the WT Act unless it was granted exemption under Section 11 of the IT Act. Consequently, by way of abundant caution, the Petitioner belatedly filed its return of wealth for the AY 1991-92 under protest on .....

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of wealth tax filed by the Petitioner was time barred and accordingly treated as invalid. 10. By letters dated 20th November 1993 and 19th June 1996 the Petitioner requested Respondent No. 1 to regularize the assessment proceeding for the AY 1991-92 by issuing notice under Section 17 of the WT Act or to refund the wealth tax of ₹ 5,43,692 paid by it under protest. A reminder was sent on 10th June 1997. 11. Having failed to receive any response from Respondent No. 1, the Petitioner on 17th .....

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ls) [ CIT (A) ] rejected the Petitioner s appeal, the Petitioner filed a further appeal before the Income Tax Appellate Tribunal ( ITAT ). By an order dated 19th November 1997 in the appeal by Wular Trust, which is common to the appeals of other similarly situated sister trusts of the Petitioner, i.e., the other Petitioners herein, the ITAT allowed the appeals holding that since the Petitioner had time up to 31st March 1993 to disinvest the shares held by it, the benefit under Section 11 (1) (d) .....

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d the application filed by the Petitioner under Section 10 (2) (b) of the WT Act. 14. The case of the Petitioner is that Respondent No. 1, Additional Director of Wealth Tax (Exemption), ought to have regularized the wealth tax proceedings and passed an assessment order. Alternately, it is submitted that if according to Respondent No. 1, the said return of wealth tax was invalid, then the Petitioner was entitled to refund of the tax paid under protest. The impugned order dated 28th April 2000 is .....

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Act. In terms of the amendment, the asset held by the Petitioner namely shares of BAL was required to be disinvested before 31st March 1992. This meant that on the due date for filing the income tax return, i.e., 31st October 1991, the Petitioner was ineligible to exemption under Section 11 of the IT Act. Later when the wealth tax return was filed on 26th November 1993 for AY 1991-92 claiming exemption in terms of the amendment to Section 11 of the IT Act. 16. Mr. Vasdev placed reliance on the .....

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followed the decision of the Madras High Court in Commissioner of Income Tax v. Kumudam Endowments (2000) 242 ITR 159 (Mad). In short, his submission is that there is no violation of Section 13 (1) (d) of the IT Act as the Petitioner was permitted to hold shares in BAL up to 31st March 1993. The mere fact that the wealth tax return for AY 1991-92 was filed belatedly did not, according to him, entitle the Department to retain the wealth tax paid by the Petitioner under protest. Reliance was plac .....

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etition regarding the Petitioner's failure to disinvest the shares held by it before 31st March 1993. In particular Mr. Manchanda drew the attention of the Court to para 5 (N) of the counter affidavit dated 16th October 2001 in Writ Petition (Civil) No. 2305 of 2001 where it was categorically averred that the Assessee had not disinvested the assets which were in the prohibited modes by 31st March 1993. Mr. Manchanda referred to the rejoinder of the Petitioner wherein there was no denial of t .....

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er Section 11 of the Act be sustained. Therefore, the question of the Petitioner being issued refund of the aforementioned amount simply did not arise. Mr. Manchanda submitted that the earlier orders of the ITAT dated 20th November 2001, 23rd May 2001 and 27th January 2005 were based on the misleading statements and misrepresentation of the facts by the Petitioner and therefore, could not constitute a binding precedent. 19. Having considered the above submissions, it appears to the Court that th .....

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asset is acquired or 31st March 1992, whichever was later. This was later extended till 31st March 1993. It was in view of the above amendment that the Petitioner filed its revised return on 18th January 1992 under the IT Act claiming exemption under Section 11 of the IT Act. 20. However, for the reasons best known to it, the Petitioner did not file a wealth tax return. The Respondent is right in contending that there was no valid reason given by the Petitioner in not filing the wealth tax retu .....

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t the deadline for the disinvestment of the shares held by it had long crossed. Yet the Petitioner subsequently claimed that it was entitled to claim the refund of the amount as it had paid the self assessment tax only because as of 31st March 1991 it was entitled to retain the shares which were in the prohibited modes. 22. As rightly pointed out by Mr. Manchanda, learned Senior standing counsel for the Revenue, the conduct of the Petitioner in filing the wealth tax return belatedly and much aft .....

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nter-affidavit filed by the Respondent in Writ Petition (Civil) No. 2305 of 2001 requires to be set out in toto: 5 (N) On receiving this application CBDT called for the report from the concerned officer which was submitted in the case of Dal Trust vide letter dated 23rd October 1998. The Board also required the concerned officer to apprise it with respect to finality of the issues concerned by way of appeal or otherwise. It is also to be pointed out here that the Board was constantly in touch wi .....

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isclosing the net wealth at ₹ 1,81,48,100 along with the challan for payment of self-assessment tax ₹ 5,44,412. The appeals filed by the Department under the Income Tax Act as well as Wealth Tax Act are still pending. 24. Significantly, in the rejoinder-affidavit filed by the Petitioner the reply to the above paragraph reads as under: N. In reply to contents of para 5 (N) of the counter affidavit, it is submitted that the appeal filed by Respondent No. 1 against the orders of CIT (Ap .....

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