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TMI Blog2015 (2) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... s of beneficiaries in the form of ownership in the respective shares. Since the wealth is under the administration of the trust, the Wealth-tax Officer dealt with the same under section 21 of the Act. This provision maintains a dichotomy. In case the trust is created in favour of any specified persons, sub-section (1) places the obligation to pay the wealth-tax shall be on the Court of Wards, Administrator-General, Official Trustee, Receiver, Manager or Trustee, as the case may be, to the same extent, as it would have been recoverable from the person, on whose behalf or for whose benefit the assets are held (beneficiaries). Where, however, the trust deed or other similar document is silent about the particulars of beneficiaries, a different procedure is prescribed under sub-section (4) thereof, including the rate of tax. In the instant case, the Wealth-tax Officer sought to levy tax, by taking recourse to section 21(4) of the Act. Aggrieved by that, the trustees, i.e., the respondents filed appeals before the Commissioner. Three appeals preferred by the respondents before the Commissioner were allowed. Challenging the same, the Revenue preferred further appeals before the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in reversing the decision of the Commissioner of Wealth-tax (Appeals) who held that the interest of the beneficiaries in the trust property was assessable under section 21(4) of the Act?" R. C. No. 263 of 1996 R. A. Nos. 156 and 157/Hyd/1996 "(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in holding that the children of the two ladies, namely, Sb. Fatima Fouzia and Sb. Amina Marzia, get accelerated interest in the trust properties in spite of the clauses in the trust deed that they acquire interest in the trust property only after the life time of the ladies, namely, Sb. Fatima Fouzia and Sb. Amina Marzia ? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in reversing the decision of the Commissioner of Income-tax (Appeals) who held that the interest of the beneficiaries in the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case, the Tribunal was correct in holding that the capital gain if any got merged with the corpus and formed part of the corpus ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the children of Sb. Fatima Fouzia are only corpus beneficiaries and not income beneficiaries ignoring the term of the trust deed ? (5) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding the view that the trustee did not receive the capital gains income or sale proceeds of the jewellery for on behalf of the children of Sb. Fatima Fouzia ? (6) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the shares of the beneficiaries are unknown and indeterminate and, hence, the assessment should be made under section 164(1) of the Income-tax Act, 1961 ?" R. A. Nos. 359 and 361/Hyd/94 &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cific provisions of the Act. Sri Ravindra Chenji, learned counsel for the assessees, on the other hand, submits that the dispute is no longer res integra and it is covered by the judgment of the hon'ble Supreme Court in CWT v. Trustees of H. E. H. Nizams Family (Remainder Wealth) Trust [1977] 108 ITR 555 (SC). He contends that in identical circumstances, the hon'ble Supreme Court took the view that even where a trust deed provides for a vested remainder in favour of some persons and no life estate as such is created, the authority under the relevant provisions of the Act has to be guided by the contents of the trust deed. He submits that once the trust deed has provided for devolution of the property to the children of the two women, the beneficiaries, are clearly identified and thereby, the occasion to invoke section 21(4) of the Act does not exist. That there existed wealth, amenable to the tax, is beyond any pale of doubt. It is equally undisputed that the trustees were liable to be assessed under section 21 of the Act. The entire controversy is as to whether the assessment has to be made under sub-section (1) or sub-section (4) thereof. It is almost through the proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose, one has invariably to look into the contents of the trust deed itself, and no other course is permissible. In the instant case, the terms of the trust deed are very clear and unambiguous. Even while conferring a limited privilege of wearing the ornaments in favour of the named women, the trust deed has clearly mentioned that on the death of the two women, the jewellery shall devolve upon their children. It is true that during the life time of the two women, it is difficult to treat any particular individual as the immediate beneficiary, particularly when the right was restricted only to the one of wearing and returning the jewels. However, in law, what becomes necessary is whether there are any beneficiaries at all. It is immaterial whether they are the beneficiaries at present or in future. Once the deed has stipulated that on the death of the two women, their children would become the beneficiaries, the occasion to invoke section 21(4) of the Act does not arise. The inescapable conclusion is that the assessment must be under section 21(1) of the Act. We derive support to this, from the judgment of the hon'ble Supreme referred to above. Their Lordships observed as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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