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TMI Blog1967 (4) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... s been referred to us by the Tribunal. The assessees are the trustees of H. E. H. The Nizam's Supplemental Family Trust. The assessment years are 1957-58, 1958-59 and 1959-60 for which the corresponding valuation dates are March 31, 1957, March 31, 1958, and March 31, 1959, respectively. The Wealth-tax Officer held that the shares of the beneficiaries were not determinate and, therefore, the trustees were liable for assessment on the whole of the wealth, and that the provisions of section 21(4) of the Wealth-tax Act were clearly applicable. It is unnecessary to state the corpus of the trust or the income it yields except to say that there is sufficient and substantial income, and that the shares are valued at about six lakhs of rupees. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 6 of the trust deed. In the case of each beneficiary, the heirs were to inherit the trust funds allocated to him or her in certain proportions as provided in the said three clauses. The trustees contested before the Wealth-tax Officer their liability to the tax on two grounds, viz., (1) that the trustees, being an association of persons, cannot be taxed to wealth-tax, as the charging section 3 does not contemplate charging the wealth of " association of persons ", and (2) that the trustees cannot be said to be holding the trust fund on behalf of the beneficiaries. The Wealth-tax Officer repelled both these contentions and as we have said earlier, he has held that the provisions of section 21(4) of the Wealth-tax Act are clearly applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by and under which the income from the trust fund cannot be distributed during the lifetime of the settlor. According to the learned advocate for the department, the term which requires accumulation of the income during the settlor's lifetime would make the shares indeterminate. But we are unable to understand how such a contention could be addressed because under the trust deed, the beneficiaries have a vested right in the accumulated income of the corpus and would be entitled to it in the event of the death of the settlor. In other words, there is a postponement of the enjoyment but it could not be contended that mere postponement of the enjoyment deprives the beneficiaries of their rights or that they have no vested rights in that income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at, in order to apply the provisions of section 21(4) one of the important ingredients is that the shares of the person on whose behalf or for whose benefit any such assets are held should be indeterminate or unknown, and it is only then that the Wealth-tax Officer may levy and recover tax from the trustee as if the person on whose behalf or for whose benefit the assets are held was an individual. In other words, the whole of that wealth would become liable for assessment as if the trustees are the owners of it and not on behalf of each of the beneficiaries in accordance with the share of that beneficiary in the wealth of that trust. As we have said, the department also could not controvert that the trust deed definitely fixes the shares of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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