Wealth tax : Assessment of trust/trustee : S. 21(1) of Wealth-tax Act, 1957 : A.Y. 1980-81 : Official trustee appointed by operation of statute is not covered by scope and ambit of S. 21(1)

II. Reported :

50. Wealth tax : Assessment of trust/trustee : S. 21(1) of
    Wealth-tax Act, 1957 : A.Y. 1980-81 : Official trustee appointed by operation
    of statute is not covered by scope and ambit of S. 21(1)

[Official Trustee, Maharashtra State v. CWT, 180
Taxman 595 (Bom.)]

Sir Jamsetjee Jejeebhoy Baronatcy Trust was reconstituted
under the Sir Jamsetjee Jejeebhoy Baronatcy Trust Act, 1915. The State of
Maharashtra amended the Sir Jamsetjee Jejeebhoy Baronatcy Trust Act, 1915 by
the Maharashtra Act No. XXVIII of 1974 and the trustees in respect of the
trust were substituted by the official trustee appointed under the Official
Trustee Act, 1913. For the A.Y. 1980-81 the official trustee filed the return
of wealth of the trust and claimed that the trustee is not assessable
u/s.21(1) of the Wealth-tax Act, 1957. The Assessing Officer rejected the
claim and the same was upheld by the Tribunal.

On reference by the official trustee, the Bombay High Court
reversed the decision of the Tribunal and held as under :

“(i) The official trustee could not be said to be a person
appointed under a trust ‘declared by a duly executed instrument in writing’.
The word ‘instrument’ does not include statute. The Wealth-tax Act does not
define the word ‘instrument’ and does not specifically include ‘statute’
within the meaning of the term. In the instant case, the official trustee was
not appointed under any rule-making power which might have amounted to
statutory instrument but under the statute itself.

(ii) Once it was held that S. 21(1), which is the main
charging section, did not apply to the assessee, it must necessarily follow
that S. 21(1A) would also not be applicable to him. In that view of the
matter, the assessment of the assessee in the instant case could not have been
effected u/s.21. In the circumstances, the order of the Tribunal was not
justified.”