Assessment in cases of diversion of property, or of income from property, held under trust for public charitable or religious purposes

Section 21A of the Wealth-tax Act, 1957 deals with assessment in cases of diversion of property, or of income from property, held under trust for public charitable or religious purposes. [Notwithstanding anything contained in clause (i) of section 5, where any property is held] under trust for any public purpose of a charitable or religious nature in India and— [(i) any part of such property or any income of such trust [whether derived from such property or from voluntary contributi The Act came into force on 01 Apr 1957.

[Notwithstanding anything contained in clause (i) of section 5, where any property is held] under trust for any public purpose of a charitable or religious nature in India and— [(i) any part of such property or any income of such trust [whether derived from such property or from voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2 of the Income-tax Act] is used or applied, directly or indirectly, for the benefit of [any person referred to in sub-section (3) of section 13 of the Income-tax Act], or

(ii) any part of the income of the trust [whether derived from such property or from voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2 of the Income-tax Act], being a trust created on or after the 1st day of April, 1962, enures, directly or indirectly, for the benefit of [any person referred to in sub-section (3) of section 13 of the said Act, or] [(iii) any funds of the trust are invested or deposited, or any shares in a company are held by the trust, in contravention of the provision of clause (d) of sub-section (1) of section 13 of the Income-tax Act,] wealth-tax shall be leviable upon, and recoverable from, the trustee or manager (by whatever name called) in the like manner and to the same extent as if the property were held by an individual who is a citizen of India and resident in India for the purposes of this Act :] Provided that in the case of a trust created before the 1st day of April, 1962, the provisions of clause (i) shall not apply to any use or application, whether directly or indirectly, of any part of such property or any income of such trust for the benefit of [any person referred to in sub-section (3) of section 13 of the Income-tax Act], if such use or application is by way of compliance with a mandatory term of the trust:

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* [[Provided further that],— [(a) in the case of any association referred to in clause (21) of section 10 of the Income-tax Act,—

(i) the provisions of clause (i) and clause (ii) shall not apply; and (ii) the other provisions of this section shall apply with the modifications that,—

(1) for the words, brackets, letter and figures “in contravention of the provisions of clause (d) of sub-section (1) of section 13 of the Income-tax Act”, the words, brackets and figures “in contravention of the provisions contained in the proviso to clause (21) of (2) for the words “at the maximum marginal rate”, the words and figures “at the rates specified in [sub-section (2) of section 3]” had been substituted;] (b) in the case of any institution, fund or trust referred to in clause (22) or clause (22A) or clause (23B) or clause (23C) of section 10 of the Income-tax Act, the provisions of [clauses (i) to (iii)] shall not apply.]

1. Restored by Act 3 of 1989, s. 95 (w.e.f. 1-4-1989). Earlier the words “any interested person,” was substituted by Act 4 of 1988, s. 144, for the given expression (w.e.f. 1-4-1989). 2. Restored by s. 95, ibid. (w.e.f. 1-4-1989). Earlier clause (iii) was omitted by Act 4 of 1988, s. 144 (w.e.f. 1-4-1989).

Explanation.—For the purposes of this section,— [(a) any part of the property or income of a trust shall be deemed to have been used or applied for the benefit of any person referred to in sub-section (3) of section 13 of the Income-tax Act in every case in which it can be so deemed to have been used or applied within the meaning of clause (c) of sub-section (1) of that section at any time during the period of twelve months ending with the relevant valuation date;

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*] (b) “trust” includes any other legal obligation.]

Section 21A, The Wealth-tax Act, 1957 (Act 27 of 1957).