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TMI Blog2009 (3) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Jasani and P. C. Tripathi for the assessee. P.S. Sahadevan with A. D. Nagarjun for the Commissioner. JUDGMENT 1. The question referred by the Income-tax Appellate Tribunal under section 27 of the Wealth-tax Act, 1957 is as follows: "Whether in the facts and in the circumstances of the case and on a correct interpretation of section 21(1A) inserted by the Finance (No.2) Act, 1980, the Appellate Tribunal was justified in holding that the assessee was liable to tax on the excess of the value of the corpus of the trust over the value of the interest of the beneficiaries under the trust?" 2. The brief facts of the case are as follows: (a) Under a Letters Patent of Her Late Majesty Queen Victoria an eminent person in Bombay Sir Jamsetjee Jejeebhoy was conferred the title of Baronet. A condition of conferring baronetcy upon him was that he should settle in perpetuity such property on himself and the male heirs of his family who might succeed him in such baronetcy, as should be adequate to support the dignity of the title conferred on him. Sir Jamsetjee Jejeebhoy was therefore, desirous of settling in trust a corpus consisting of Government promissory notes which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d enacted the Sir J. J. Baronetcy Act, 1915. Under the new Act, Government promissory notes of the value of Rs. 22,54,400 were released from the earlier trust and vested afresh in the new trust and the property known as Mazagaon Castle was resettled in trust for the benefit of the baronets to succeed in the future. The Commissioner, Accountant General and Collector of Bombay were designated as a corporation for execution of the trust and this corporation had perpetual succession and seal under the name and title of "Sir J. J. Baronetcy Trustees". 3. With the enactment of the Constitution of India of 1950, by virtue of article 13 of the Constitution, the Acts above referred to which were in force before the commencement of the Constitution of India were saved. 4. The State of Maharashtra amended the Petit Baronetcy Act, 1883 and the Sir Jamsetjee Jejeebhoy Baronetcy Trust Act, 1915 by Maharashtra Act No. XXVIII of 1974 and the trustees in respect of both the trusts were substituted by the official trustee appointed under the Official Trustees Act of 1913. There were other changes which were made, some of which pertained to the nature of the corpus of the trust but those chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to manage property on behalf of another, or any trustee appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise (including a trustee under a valid deed of wakf), the wealth-tax shall be levied upon and recoverable from the court of wards, administrator-general, official trustee, receiver, manager or trustee, as the case may be, in the like manner and to the same extent as it would be leviable upon and recoverable from the person on whose behalf or for whose benefit the assets are held, and the provisions of this Act shall apply accordingly. Explanation.-A trust which is not declared by a duly executed instrument in writing (including a valid deed of wakf) shall be deemed, for the purposes of this sub-section, to be a trust declared by a duly executed instrument in writing if a statement in writing, signed by the trustee or trustees, setting out the purpose or purposes of the trust, particulars as to the trustee or trustees, the beneficiary or beneficiaries and the trust property, is forwarded to the Assessing Officer-, (i) where the trust has been declared before the 1st day of June, 1981, within a period of three months from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Wealth-tax Act which is the sole charging section in respect of assets held in trust by the various categories of specified persons. 10. Counsel for the assessee placed reliance upon the judgment of the apex court in the case of CWT v. Trustees of H. E. H. Nizam's Family (Remainder Wealth) Trust reported in [1977] 108 ITR 555. In the said case, the apex court was concerned with the interpretation of section 21(1) and (4) of the Wealth-tax Act, 1957, and the question of valuation of trust property in respect of a trust constituted under a deed of trust. Two of the questions that were referred in that case were: (i) Whether the trustees were liable to be assessed under section 3 of the Wealth-tax Act in the status of the individual, and (ii) Whether in the facts and circumstances of the case the Appellate Tribunal was right in holding that the provisions of section 3 of the Wealth-tax Act should be considered as subject to the provisions of section 21 of the above Act. In the said case, the apex court held that the Revenue had two modes available for assessing the interest of the beneficiary of a trust property. It must either assess it in the hands of a trustee in a repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply to the interpretation of the Defence of India Rules as it applied to the interpretation of the Central Act. Section 8(1) of the General Clauses Act was as under: "Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals and reenacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provisions so repealed shall, unless a different intention appears, be construed as references to the provision so reenacted." 13. The argument was that by reason of rule 3 of the Defence of India Rules, section 8(1) may be read as providing for a case where any one of the Defence of India Rules repeals and reenacts, with or without modification, any provision of the Defence of India Rules, so that a reference in an order passed under the Rules to the unrepealed rule must be construed as a reference to the reenacted rule. 14. While dealing with the aforesaid contention a Division Bench of this court observed as under (page 262 of AIR 1944 (Bom): "But the difficulty in the way of the prosecution is that to bring the order of delegation within the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court-fees Act does not define the word 'instrument'. That being so we have to turn for the connotation of the word 'instrument' to its ordinary dictionary meaning. According to Stroud's Judicial Dictionary, 3rd Ed., Vol. II, P. 1472 'instrument' means a writing and generally imports a document of a formal legal kind. Semble, the word may include an Act of Parliament (see Deed of Settlement) so, in the Trustee Act, 1925 (15 Geo. 5, C.18) S.68 (11) Conveyancing Act, 1881 (44 and 45 Vict. C.41) section 2(xiii), 'instrument' include deed, will, in closure, award and Act of Parliament'. Thus, an instrument may include a statute enacted by Parliament, if the particular statute in its context includes it as an instrument. According to Jowitt's Dictionary of English Law, Page 984 'instrument means' a formal legal writing, e.g., a record, charter deed of transfer or agreement'. It is, however, observed that under the Law of Property Act, 1925, section 205(1)(viii), 'instrument' for the purpose of this Act does not include a statute unless the statute creates a settlement. 'An instrument is a writing and generally means a writing of a formal nature. But where there is a power to appoint by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of his constitutional powers.' The President's order having been made under power conferred upon him by article 359 that order would have the same connotation as the statutory instrument defined by the Statutory Instruments Act, 1946 and therefore was an instrument within the meaning of section 8(1) of the General Clauses Act. That does not mean that a statute like the U. P. Court-fees Act which is an edict of the Legislature is an instrument. In Emperor v. Rayangouda Lingangouda Patil [1944] 46 Bom LR 495; AIR 1944 Bom 259, the High Court of Bombay considered whether an order of the Government delegating its power to District Magistrates under the Defence of India Rules was an instrument within the meaning of section 8(1) of the General Clauses Act. The High Court held that an instrument, generally speaking, means a writing usually importing a document of a formal legal kind, but it does not include Acts of Parliament unless there is a statutory definition to that effect in any Act. There is thus ample authority to hold that ordinarily a statute is not an instrument unless as in the case of Conveyancing Act of 1881, the definition includes it or as in the case of section 205(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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