Mumbai bench of Tribunal holds that assets held under an offshore trust structure not subject to wealth tax in the hands of the beneficiaries in India.
Background
• Yashovardhan Birla, the assessee, is one of the beneficiaries in an offshore irrevocable discretionary trust settled in 1989 by a non-resident relative (Settlor), in relation to offshore assets of the Settlor. The said offshore trust was executed by an offshore corporate trustee. The offshore trust comprised entirely of offshore assets, held through offshore corporate vehicles. The assessee voluntarily disclosed the details of beneficial interest in the trust from AY 2014-15 onwards in its income-tax returns.
• Pursuant to search and seizure proceedings conducted under section 132 of the Income-tax Act, 1961 (‘the IT Act’), reassessment proceedings were initiated by issue of notice under section 17 of the Wealth-tax Act, 1957 (‘the Wealth-tax Act’) on the assessee to bring to tax the undisclosed wealth escaping assessment for the period AY 2007-08 to AY 2013-14.
• In response, initially a return of wealth was filed by the assessee. Subsequently, the same was revised declaring additional wealth in respect of jewelleries stating that some of the ancestral jewelleries bequeathed to him remained to be added since reconciliation with wealth-tax return of late parents / family members was not readily available.