TMI Blog1988 (2) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... below Rs. 1 lakh, no wealth-tax was payable. However, when the Department took the matter in appeal to the Tribunal, the Tribunal took the view that having regard to the provisions of section 21(4), the assessee was not entitled to contend that the taxable wealth having been computed at less than Rs. 1 lakh, no wealth-tax was payable. The Tribunal having set aside the order of the Appellate Assistant Commissioner, the question reproduced above has been referred to this court at the instance of the assessee. Learned counsel on behalf of the assessee contends that under Schedule I, Part 1, Paragraph A of the Act as in force at the material time, namely, assessment year 1975-76, it was expressly provided that no wealth-tax shall be payable where the net wealth in the case of an individual does not exceed Rs. 1 lakh. Thus, according to learned counsel, the net wealth of the assessee being less than Rs. 1 lakh, the net wealth was exempted. It was contended that since the net wealth was less than Rs. 1 lakh, there is no question of any levy of tax at the higher rate of 1 1/2% as contemplated by section 21(4) of the Act. Learned counsel appearing on behalf of the Revenue has, howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this section, where the shares of the persons on whose behalf or for whose benefit any such assets are held are indeterminate or unknown, the wealth-tax shall be levied upon and recovered from the court of wards, administrator-general, official trustee, receiver, manager, or other person aforesaid as if the persons on whose behalf or for whose benefit the assets are held were an individual who is a citizen of India and resident in India for the purposes of this Act, and (a) at the rates specified in Part I of the Schedule ; or (b) at the rate of one and one-half per cent. ; whichever course would be more beneficial to the Revenue: ..........." Section 21(4) refers to levy of wealth-tax and the legal entity on whom the levy is to be made in a case where the shares of the persons on whose behalf or for whose benefit any such assets are held are indeterminate or unknown. The assessment is to be made as if the persons on whose behalf or for whose benefit the assets are held were an individual who is a citizen of India and resident in India. Apart from providing for the mode and manner of levy of wealth-tax, section 21(4) also provides for the rate at which the levy is to be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, before wealth-tax is levied, it will have to be ascertained whether, notwithstanding the charging provision, the assessee is not entitled to the benefit of the exemption which is given by the proviso in the Schedule. Section 21(4) undoubtedly refers to two different rates. But it has to be appreciated that the question of applying the higher rate will arise only if at the rate prescribed in the Schedule, the Revenue stands to lose something. Where, however, in terms of the Schedule, no rate is applicable and indeed there is an exemption from the applicability of the rate and consequently a case which is exempted is not brought within the charging provision, the question of ascertaining whether the higher rate prescribed by section 21(4) will benefit the Revenue or not will not really arise. Before ascertaining whether wealth-tax should be levied at the rate of 1 1/2% per cent., the question of chargeability will have to be ascertained. The effect of the Charging provision referring to the rate of tax and the Schedule of the rate of tax making provision for non-levy of wealth-tax in a case where the net wealth does not exceed Rs. 1 lakh is that net wealth which is less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was clearly the intention of the Legislature when section 21(4) was enacted and the rate of 1.5 per cent. was prescribed that the exemption of Rs. 1 lakh should not be made available in the case of a discretionary trust. It is undoubtedly true that the intention which appears from the memo, was not to make available the initial exemption of Rs. 1 lakh to a private discretionary trust. But, what we are, however, concerned with is the construction of the relevant provisions as they stand. If, on a construction of the relevant provisions as they stand, it appears to us that section 21(4) cannot be treated as a charging provision and must be treated only as a provision intended to facilitate the assessment, notwithstanding the fact that it prescribes two different rates of tax, the question as to whether the second rate which is the higher and a rate more beneficial to the Revenue will be attracted in a given case, depends upon the construction of the charging provision in section 3 and the impact of the charging provision on the proviso which is intended to give benefit to persons owning net wealth less than Rs. 1 lakh. We are not able to find anything in section 21(4), so as to con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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