9911796707
TMI Blog1961 (4) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... usage, is divided into 640 shares among the descendants of Yusuf, the foster son of the saint. These beneficiaries go by the name of kasupangudars. It is common ground that there is no document of trust. The nattamaigars are hereditary trustees and the right of kasupangudars to the surplus has been recognised both by custom and by judicial decisions. The history of this trust is set out in some detail in the decision in the Trustees, Nagore Durgah v. Commissioner of Income-tax [1954] 26 ITR 805 (Mad.). Reference will be made to this decision in due course. Up to and including the assessment year 1952-53, the surplus income of the Durgah was assessed in the hands of the trustees of the Durgah as an association of persons . In the case of the assessment proceedings for the years now in question, it was claimed before the department that the assessment should be made under section 41 of the Act. It was urged that the managing trustees of the Durgah managed the properties on behalf of the kasupangudars under the orders of court. This contention was not accepted partly for the reason that the estate vests in the trustees and also that even if managers have been appointed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instrument in writing, whether testamentary or otherwise, the tax shall be levied upon, and be recoverable from, such Court of Wards, Administrator-General, etc. Sub-section (2) of section 41 further provides that: Nothing contained in sub-section (1) shall prevent either the direct assessment of the person on whose behalf income, profits or gains therein referred to are receivable, or the recovery from such person of the tax payable in respect of such income, profits or gains. It has been mentioned that there is a body of trustees known as nattamaigars, eight in number, who are entitled to manage the trust. According to the scheme that was framed as the result of a scheme suit, the management and administration of the affairs of the Nagore Durgah was vested hereditarily in the eight trustees or nattamaigars of the Durgah. This body constituted the board of trustees, each trustee being entitled to hold office for life and after him the trusteeship was to devolve on his next male heir in accordance with the prevalent custom. In the scheme, as it was originally framed, there was provision for the election of one among the trustees as the managing trustee. Clause (4) of the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n two grounds : (1) That the relevant clause providing for the appointment of a managing trustee was only permissive in its scope ; and (2) that the body of trustees are the persons in whom the property of the Durgah vests, while, in the case of a manager, the property does not vest in him . The department relied upon Jainulabdeen Sahib v. Commissioner of Income-tax [1944] 12 ITR 285 (Mad.). In that case, certain persons were appointed as managing agents at the request of parties in respect of a business, which was the subject-matter of a suit and a compromise. In the assessment proceedings the claim was put forward that section 41 applied. The learned judges held that an order passed on the terms agreed upon will still remain an agreement between the parties and not an order within the contemplation of section 41. It seems to us that this decision has no application to the present case. The learned counsel for the respondent does not put forward the plea, nor was it so specifically found either by the departmental officers or the Tribunal that the settlement of the scheme was the result of a compromise between the parties. Under the clauses relating to the appointment or the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the essential difference between a manager and a trustee, viz., that in the former the estate does not vest while in the latter it does, the two are different. It is unnecessary to pursue the matter further in this case. (p. 813) Counsel for the department places considerable reliance upon these observations. In so far as the first part of the above extract is concerned, there is material available before us setting out what the functions of the managing trustees are, particularly, in relation to the disposal of the surplus income of which the beneficiaries are the kasupangudars. The learned counsel for the department emphasises that a managing trustee continues to be a trustee and that he cannot be regarded as a manager coming within the scope of section 41. It is common ground that if the managing trustees or the board of trustees are regarded as trustees simply, the benefit of section 41 will not be available to them, as section 41 deals with the case of trustee or trustees appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise. There is no document of trust in this case and this part of the provision cannot accordingly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch person to the extent of the interest of each of the persons on whose behalf he so held the land. Their Lordships of the Supreme Court in dealing with the case observed that a trustee is the legal owner of the trust property and the property vests in him as such. He may hold the trust property for the benefit of the beneficiaries, but he does not hold it on their behalf. On the facts of the particular case before them their Lordships noticed that the beneficiaries under the trust were not persons who were jointly interested in the land, and section 11(1) of the U.P. Agricultural Income-tax Act did not, therefore, apply. We are unable to derive any assistance from this decision in so far as the present case is concerned. That decision went on specific wording of the provisions of the Agricultural Income-tax Act. It seems to us that section 41 applies to the special class of cases where the person in receipt of income is the real assessee ; and in cases where the management of the estate on behalf of another is undertaken by the Court of Wards, Administrator-General, official trustee, receiver or manager appointed by or under order of court, the section clearly indicates the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
