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TMI Blog1987 (2) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... 111 ITR 1 (SC). Although, issue is a legal one, as the position was fairly well settled at the time of hearing before CWT(A) we do not see any justification for embarking on a new exercise of gathering all new data and applying the same now. This ground is rejected on this basis. 4. The second point in appeal is regarding the valuation of property at Ruo Afonso Albuguerque Road, Panaji at Rs. 2,28,700 in place of Rs. 65,800 for A. Y. 1975-76 and Rs. 2,39,000 in place of returned value of Rs. 1,30,670. Shri Inamdar proposed deduction of the reversionary values from the gross value of the property in view of CIT v. Smt. Ashima Sinha [1979] 166 ITR 26 (Cal) which though given for section 269C of IT Act would apply to WT also. After hearing the D.R. we hold that as the property is already tenanted, no separate addition on account of reversionary value need be added. This ground is partly allowed for 1975-76 and 1976-77. 5. The next ground of appeal is regarding inclusion of certain agricultural lands owned by two trusts in the hands of the assessee. This is a peculiar case where the roles of revenue and assessee are reversed. Generally the revenue alleges a trust to be discretiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned, the Trustees may either accumulate the whole or part of the income of the Trust Fund or, at their discretion, pay and/or apply the same or part therefore to or amongst the beneficiaries, or, to anyone or more of them to the exclusion of others or other of them, for their, his or her absolute use and benefit, in such proportion and such manner as the Trustees may in their absolute discretion think fit. Provided always that during the minority of the aforesaid Manguesh Rajaram Wagle he shall be the sole beneficiary. Provided however that the whole or any part of the income of the Trust Fund as may not have been distributed by the Trustees, in any year, shall at the end of the year be added to and be held as accretion to capital and form part of the corpus of the Trust Fund, and, shall be dealt with accordingly. For the purpose of this proviso the word 'Year' means the period ending on the 31st March of each calendar year." (3) Clause 4 is regarding the Trust fund: "On the date of Distribution, the Trustees shall hold the Trust Fund or such part thereof as shall not have been paid, transferred or applied under any Trust or power herein contained, along with the income th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough the WTO's order Shri Inamdar submitted that the WTO had not appreciated the impact of the various clauses of the trust deed. WTO allowed himself to be swayed by irrelevant aspects, viz. (i) the situation before the property was settled and after being practically the same; (ii) reduction of incidence of tax; (iii) provision in the trust deed regarding income distribution. WTO overlooked the fact that the trust was created with the approval of the Court in the larger interest of the family which the assessee might raise in future. Tax benefit, if any, is marginal and was certainly not foreseen or worked for the guardians-cum-settlors. The provisions of section 164 of IT Act and 21(4) are not pari materia in that the latter refers to shares of persons whereas the former refers to relevant income. Thus unless specific assets of the trusts are referred to as receivable by the assessee or are held in trust wholly for the benefit of the assessee section 21(1) and consequently section 21(2) would not be applicable. Shri Inamdar submitted that the order of the CWT(A) suffers from the same deficiencies. The shares should be specified in the assets including vested and contingent inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 1-4-1980 introducing Explanation 1 to section 21(4). Even after amendment CBDT circular NO. 281 clarifies that it is not necessary that the beneficiary in the relevant year should be actually named. All that is necessary is that the beneficiary should be indentifiable with reference to the order of the Court. 10. In reply Shri Joshi submitted that since on the valuation date no beneficiary existed except the assessee, the assessee's interest would extend to the whole of the assets held by the trustees. The picture emerges still more clearly after the assessee attained majority (clause 28) but the situation prior to this date, though a little nebulous would be no different. The trustees could not have even imagined the existence of other beneficiaries like wife and child, during the minority of the assessee (clause 4). The case law regarding share of income being relevant has to be applied mutatis mutandis the share in assets. The Supreme Court judgment in Trustees of H. E. H. Nizam's Family (Remainder Wealth) Trust's case is a clear authority for the proposition that on every valuation date a notional distribution has to be assumed. Even where interest passes on death of a be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aries in the following shares: The whole of the trust fund shall be equally divided amongst the M. R. Wagle, his wife and/or male children." On the date of distribution the trust fund may or may not exist because in clause 3, the trustees have discretion not to accumulate the whole income and use the same for the beneficiary who was the assessee himself. 13. The question to be seen however is who are the possible beneficiaries on the valuation date? The answer is that none other than the assessee himself is beneficiary. The difference in the languages regarding income and wealth (clause 3 and clause 4) will in the ultimate analysis be found to be having no impact. If the trustees on the valuation date were to refuse to hold the property in favour of the assessee and the earmark the same for any person, with fair certainty. During the minority there is no question of the assessee having any wife. Even thereafter, one has to see not merely actual but possible event. Thus, on the respective valuation dates the interest of all the potential beneficiaries were so remote that they could not even be said to be contingent. Thus, although the trust deed not have any provision for dist ..... X X X X Extracts X X X X X X X X Extracts X X X X
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