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TMI Blog1973 (4) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... estments should be paid to Smt. Alamay, wife of his son, Manekshah, " for the benefit of Manekshah till he survives " and Manekshah should be entitled to utilise the amount of such income " according to his sweet will ". Clause 13 of the will also made a provision for disposal of the corpus after the death of Manekshah. Likewise, by clause 14 of the will, the deceased directed that a sum of Rs. 5,00,000 should be set apart from his estate and invested in shares of banks or joint stock companies or Government securities and the net income from such investment should be paid to his another son, Nadirshah, during his lifetime. The deceased also gave further directions regarding the disposal of the corpus after the death of Nadirshah. Clause 15 of the will provided that so far as these two amounts of Rs. 5 lakhs each were concerned, " the trustees should invest them in shares or securities and get them transferred in their names as my trustees " and such shares or securities, after being transferred in the names of the trustees " should be lodged with any sound bank at Bombay or in the Bank of Baroda at Baroda, with such an arrangement with the bank that the bank should directly pay th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies of the face value of Rs. 4,61,000 which were meant for the benefit of Nadirshah stood in the joint names of Nadirshah, the assessee, and one other person, and since neither lot of Government securities stood in the name of the assessee and the assessee had no control or dominion over either of these two lots of Government securities, they could not be said to be held by the assessee within the meaning of section 21, sub-section (1), and no wealth-tax could be levied on them in the hands of the assessee by relying on that provision. This contention found favour with the Tribunal and on the view that the Government securities did not stand in the name of the assessee and the assessee had no control or dominion over them and they could not, therefore, be said to be held by the assessee for the benefit of any person but they were in fact held directly by the beneficiaries themselves, the Tribunal deleted the inclusion of the value of the life interest of Manekshah and Nadirshah in the Government securities from the net wealth of the assessee. The Commissioner thereupon applied for a reference but the application was rejected by the Tribunal and the Commissioner was, therefore, cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Supreme Court in Commissioner of Wealth-tax v. Kripashankar Dayashanker Worah, the addition of these words did not make any alteration in the law but merely clarified the true import of the provision as it was likely that an argument may be raised that a trustee holds assets for the benefit of the beneficiaries and not on their behalf and is, therefore, not within the scope and ambit of the provision. The crucial words in sub-section (1) of section 21 which fall for consideration are " assets...... which are held by...... any trustee appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise ". What is the meaning of the expression " held by...... any trustee " ? The argument urged on behalf of the assessee was that, in the context in which the word " held " occurred, it could connote only factual management and an asset could be said to be " held " by a trustee only if the trustee was in factual management of the asset. Here, in the present case, said the assessee, the Government securities of the face value of Rs. 4,61,000 in either case were not in the factual management of the assessee as trustee but they were in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pend on the context and the setting in which it is used and the purpose it is intended to achieve. It is possible that, in one context a word may mean one thing and, in another, it may mean something different. That is so with the word " held " and we have, therefore, to see what, in the context in which it is used in section 21, sub-section (1), this word means. Now one thing is clear, namely, that the word " held " when used in reference to receiver or manager cannot include the concept of vesting, for it is clear law that the property does not vest in a receiver or manager. The receiver or manager only manages the property on behalf of others and, therefore, the word " held " in that context must mean factual management. But the question before us does not arise in relation to receiver or manager. We have to consider what is the meaning of the word " held " when used in reference to a trustee. The answer to this question would be self-evident if we reproduce the relevant words of sub-section (1) of section 21. They read : " ........ assets...... which are held by...... any trustee ...... the wealth-tax shall be levied upon and recoverable from the...... trustee ...... in the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. The argument of the revenue was that this exemption was limited only to those certificates which stood in the name of the assessee and did not extend to certificates which stood in the names of his nominees, though the assessee had beneficial ownership in such certificates. This argument was accepted by a Division Bench of this court and the Division Bench took the view that the word " held ", in the context in which it occurred, was used to denote certificates registered in the name of the assessee. This view was taken by the Division Bench because the legislature had used two different expressions in the provisions of the Wealth-tax Act, namely, " belonging to " and " held ", and this deliberate use of two different expressions clearly indicated that the legislature intended to use them in different senses and the word " held " could not, therefore, be given its broad general meaning, namely, " belonging to " or " of the ownership of " the assessee. The Division Bench also took into account the fact that the certificates referred to in section 5(1)(xvi) were issued by the Central Government under a scheme which provided that an individual can purchase such certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes, it must be said to be held by the trustee for the benefit of the beneficiary, even though it may stand in the name of a nominee. Now, in the present case, the Government securities of the face value of Rs. 4,61,000 stood in the joint names of Manekshah and his wife in the one case and in the joint names of Nadirshah, assessee, and another person in the other case. But they continued to form part of the trust property and the assessee was not discharged from his obligations as trustee in respect of them. In fact, according to clause 15 of the will, the Government securities of the face value of Rs. 4,61,000 should have remained in the name of the assessee but it appears that, since the life interest in these Government securities was given to Manekshah and Nadirshah, the assessee transferred these Government securities to the joint names of Manekshah and his wife in the one case and Nadirshah, assessee, and one other person in the other case. That was done obviously for the sake of convenience of collection and payment of interest to the two beneficiaries. But merely because the Government securities were transferred to the names of the beneficiaries jointly with one or more p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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