Judgement

SIKRI, J. (with Wanchoo, J.) : These appeals by special leave are directed against the judgment of the Mysore High Court in a reference under S. 27 (1) of the Wealth Tax Act (XXVII of 1957) - hereinafter referred to as the Act - answering the question "whether the sums of Rs 4,30,684 and Rs. 4,13,353 being the value of the shares transferred by the assessee to the Sandur Ruler s Family (Second) Trust could be included in the net wealth of the assessee for the assessment years 1958-59 and 1959-60 under the provisions of Section 4 (1) (a) (iii) of the Wealth Tax Act" in favour of the Revenue.

2. The question arose in the following circumstances: The appellant, His Highness Yeshwant Rao Ghorpade, hereinafter referred to as the assessee, held 12,750 shares in Sandur Manganese and Iron Ores Ltd. on March 31, 1957. On August 24, 1957, he created two Trusts; one may be called the Charitable Trust and the other the Sandur Ruler s Family (Second) Trust-may hereinafter be referred to as the Second Trust. The assessee transferred some shares to the Second Trust under conditions contained in the Trust Deed. The Wealth Tax Officer and the Appellate Assistant Commissioner, in computing the net wealth of the assessee on March 31, 1958, and March 31, 1959, the valuation dates respectively for the assessment years 1958-59 and 1959-60, included the value of these shares held by the Trustees under the Second Trust. On appeal, the Appellate Tribunal reversed the decisions of the authorities below and came to the conclusion that the value of the shares could not be taken into consideration in computing the net wealth of the assessee. The Tribunal, however, at the instance of the Department referred the question of law already set out above for the opinion of the High Court. The High Court, as mentioned earlier, answered the question against the assessee. The assessee having obtained special leave, the appeals are now before us.

3. The short question that arises is whether the shares in question held by the Trustees under the Second Trust are held for the benefit of the three minor children mentioned in the Second Trust deed. The answer to this question depends, first, on the interpretation of the words "for the benefit of .............. minor child" in S. 4 (1)(a)(iii) of the Act, and secondly, on whether on the true interpretation of the Second Trust, these assets are held for the benefit of the minor children. Section 4 (1) (a) (iii) reads as follows :

"4. (1) In computing the net wealth of an individual, there shall be included, as belonging to him

(a) the value of assets which on the valuation date are held,

(iii) by a person or association of persons to whom such assets have been transferred by the individual otherwise than for adequate consideration for the benefit of the individual or his wife or minor child or".

4. The learned Solicitor-General, Mr. Gupte, on behalf of the Revenue, contends that the word "benefit" in this section means the immediate or deferred benefit. He says that the amendment of the section made by the Wealth Tax (Amendment) Act, 1964 (46 of 1964), which came into force on April 1, 1965, is in effect declaratory. Section 4 of the Amending Act substituted a new clause for the clause set out above. The new clause is :

"(iii) by a person or association of persons to whom such assets have been transferred by the individual otherwise than for adequate consideration for the immediate or deferred benefit of the individual, his or her spouse or minor child (not being a married daughter) or both, or".

We are unable to regard the new amendment as declaratory. The amendment makes a deliberate change and the addition of the words "the immediate or deferred benefit" before the words "of the individual", apart from other changes, cannot be called a mere declaratory legislation, and we must construe the word benefit apart from the amendments made by Act 46 of 1964.

5. It seems to us that the word benefit in the context means for