(a) Wealth tax---

----Assessment---Hindu undivided family---Trust---Properties transferred to trust---Not assessable in the hands of the Hindu undivided family.

After the execution of the trust deed by the assessee-HUF, the properties were no longer held by the assessee as absolute owner thereof. Hence, the value of the property could not be included in the hands of the assessee.

Mod Lal Chhadami Lal Jain v. C.I.T. (1991) 190 ITR 1(SC) fol.

(b) Wealth tax---

----Assessment---Lease---No valid charge-created in favour of college-- Properties assessable in the hands of the assessee.

No valid charge had been created on the properties known as Jain Glass Works in favour of Chhadami Lal Jain Degree College and so the entire value of the properties was includible in the total wealth of the assessee.

JUDGMENT

OM PRAKASH, J: --At the instance of the assessee, the following questions have been referred by the Appellate Tribunal for the opinion of this Court:

"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in upholding the inclusion of the value of the Jain Nagar Quarters, which properties had been transferred by the assessee-Hindu undivided family under the trust deed, dated November 14, 1947?

(2)Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in upholding the inclusion of the entire value of the properties known as Jain Glass Works and holding that no valid charge had been created on the properties in favour of Chhadami Lal Jain Degree College?"

The facts relating to both the questions have been set out in detail in Mod Lal Chhadami Lal Jain v. C.I.T. (1991) 190 I?R 1 (SC). In so far as question No.l is concerned, the controversy is as to whether the value of the property, known as Jain Nagar Quarters, is includible in the hands of the assessee-Hindu undivided family. The Supreme Court, while dealing with the matter of income-tax of the assessee, held that the execution of the trust deed creates an overriding title for the beneficiaries thereunder. Also it was held that, indeed, after the execution of the trust deed, the properties are no longer held by the assessee as the absolute owner thereof. They are held by the assessee under the trust and with a legal obligation to apply the income exclusively for charitable purposes. The contention of the assessee is that the property, Jain Nagar Quarters, was transferred to the trust under the trust deed, dated November 14, 1947, and from the Supreme Court decision it is manifest that the 'contention of the assessee was accepted. This being so, the value of the property, Jain Nagar Quarters, could not have been included in the hands of the Hindu undivided family. Therefore, this question is answered in the negative, that is, in favour of the assessee and against the Revenue.

So far as the second question is concerned, the Supreme Court, while rejecting the contention of the assessee that an overriding title was created in favour of Chhadanu Lal Jain Degree College, held that the assessee was liable to pay tax on the entire rental income from the property, known as Jain Glass Works, of Rs.21,000. It follows from the decision that the entire value of the property has to be included in the hands of the assessee-Hindu undivided family and, therefore, this question is answered in the affirmative, that is, against the assessee and in favour of the Revenue. No order as to costs.

M.BA./2439/TReference answered.