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TMI Blog1934 (2) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ame footing) in respect of the income of the trust or whether as regards the whole or any part of it they are not so liable on the ground that they are not beneficially interested. Certain complications, arising out of previous practice, which affected the case in its earlier stages, were got rid of by arrangement and need not now be noticed. The question so propounded was answered in the affirmative by the High Court in a judgment dated 18th August, 1931. This is an appeal by the trustees, an incorporated body. The Act incorporating them (Act IV of 1913) is described in its title as an Act for settling certain properties belonging to Sir Currimbhoy Ibrahim, Baronet, so as to accompany and support the title and dignity of a Baronet and for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Baronet, about 10 per cent. having been carried to the Sinking Fund and Repair Fund and the remaining 15 per cent. having been absorbed by rates, taxes and other outgoings. The taxing Act under which the question in this case arises is the Income Tax Act, 1922, as subsequently amended. By Section 2 of that Act "assessee" is defined as meaning "a person by whom income-tax is payable" and "person" by virtue of the General Clauses Act, 1897, Section 3(39), "includes any company or association or body of individuals whether incorporated or not." Chapter 1 of the Act, containing Sections 3 and 4, is headed "Charge of Income Tax." Section 3 as amended is as follows: "Where any Act of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x shall be payable by an assessee under the head 'Property' in respect of the bona fide annual value of property consisting of any building or lands appurtenant thereto of which he is the owner......" Provisos to Section 8 relieve the assessee from income-tax on certain securities issued tax free, but by Section 16 these provisos do not apply in the computation of the total income of an assessee. By virtue of Section 14(2) and Section 16 the position is the same as regards dividends and shares of profits received from companies or firms whose profits have been taxed. Section 22(2) provides for a return of total income and Section 23(1) for assessment of the total income of an assessee and determination of the amount payable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme of the income-tax is that there is to be a statement of the total income of the assessee from which is to be deducted for the purpose of assessing income-tax, but not of super tax, nor for the purpose of any graduation of income-tax by reference to total income, the amounts of interest on tax free securities and of dividends and shares of profits already taxed. In the assessment in the present case the income of the appellants was assessed under three heads namely interest on tax free securities ₹ 1,02,390, interest on taxed securities (i.e., dividends already taxed), ₹ 20,223, property ₹ 69,182, totalling together ₹ 1,91,795. Income-tax was accordingly charged on ₹ 69,182 and super tax on the total ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refrained from dealing with a position of that kind, pointing out that it was not the case before the House. Lord Phillimore observed that it would seem in such circumstances that the assessment must be put upon the trustee. An argument was also founded by counsel for the appellants upon Section 38(2), Income Tax Act (which requires trustees, guardians and agents to furnish the revenue officials upon request with a return of the names and addresses of their beneficiaries or principals) and upon Section 40 (which provides for the assessment of guardians, trustees and agents of incapacitated or nonresident persons). It was said that the existence of these provisions supported a construction of the Act which would exclude trustees in other c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hips' opinion the effect of the Act creating these trusts is not to give the Baronet for the time being any right to any part of the interest or property specifically or any right which, even granting that the legal title is not the only thing that can ever be looked at, would make it true to say that any proportion of the interest is not "receivable" or any proportion of the property is not "owned" by the incorporated trustees. The whole income and every part of it is charged with the provision of the sums necessary to maintain the Sinking Fund and Repair Fund and to pay the outgoings and it is not until those liabilities have been met thereout by the corporation that the Baronet is entitled to what remains and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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