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TMI Blog1983 (2) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ss and income from property at Sunkurama Chetty Street alone should be taxed in the hands of the assessee as income received by the trustees ? (iv) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the provisions of section 160(1)(iv) alone would apply to the facts of the case, and that the tax liability has to be determined in respect of section 161(1) ? " The two appeals, I.T.A. Nos. 784 and 1953/73-74, relate to the assessment years 1969-70 and 1970-71, respectively, but concern the same assessee. At the outset, it is relevant to point out that the questions of law referred to this court are confined to the immovable assets, viz., Hotel Dasaprakash at Nos. 49, 50 and 51, Poonamallee High Road, Madras, and Modern Cafe, Esplanade, Madras, and all other movable assets, furnitures fittings and fixtures and all the rights, goodwill, etc., attached to and belonging to the said hotels. It is common ground that the appreciation of these questions depends solely on the construction of the will dated January 7, 1968, executed by the deceased, K. Seetharama Rao, particularly bearing in mind the intention of the testator. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A careful examination of cls. 8, 9, 10, 11 and 19 which we will be setting out hereinafter will indisputably point out so far as these movable assets are concerned, they came to vest in the trustees on the demise of the testator. We must reiterate that the same nine individuals were appointed both as executors and administrators under the will. Clause 8 provides that the hotel Dasaprakash together with all other movable assets, fixtures, were bequeathed to all his sons by first and second wives but in view of there being liabilities due by him, the liabilities would have to be discharged and that the property shall vest in the trustees. Again, in the same clause it is stated that the trustees shall forthwith hold the properties in trust for the benefit of all his sons and receive the income therefrom for the benefit of his sons equally, subject to the annuities and legacies referred to thereunder and subject to the other conditions laid down in this behalf in respect of the said properties and liabilities charged upon them. It is further provided, should there be any vacancy in the office of the trustees, the other trustees might co-opt any suitable person. Under cl. 9, it is provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reet and the business assets of 'Modern Cafe ', Esplanade, Madras, and its branches in the trustees as hereinabove mentioned and do all that is necessary for realisation of the other assets, for taking a probate of this will for determining the liabilities including the estate duty and other revenue liabilities and there after they shall vest the property to the beneficiaries under this will as set out hereinabove. The executor-trustees shall not close down any of the businesses and for keeping them running may enter into any arrangements with the beneficiaries as may be necessary including the permission to run the business on such terms and conditions the executor-trustees may lay down. My executors and trustees shall ordinarily act jointly but may act severally whenever circumstances so require, if they agree to the same jointly in writing." The opening sentence extracted above explicitly mandates that the executors shall on the demise of the testator vest the properties, movable or immovable, pertaining to the testator belonging to Hotel Dasaprakash and No. 20, Sunkurama Chetty Street and the business assets of Modern Cafe, Esplanade, Madras, and its branches in the trustees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e necessary including the permission to run the business on such terms and conditions as the executors-trustees may lay down", in support of the contention that the business came, and continued, to vest, in the executors immediately on the demise of Seetharama Rao and that so far as there was no evidence that the nine individuals shed their character as executors, these movable properties also continued to vest in the executors. We are unable to agree, for, the will has to be read as a whole. We have already pointed out that the testator had demarcated the duties of the executors as also those of the trustees ; so too, there is a clear division of responsibilities placed on the executors on the one hand and the trustees on the other. The reference to the executors-cum-trustees in the winding-up portion of the will has to be understood as describing the nine individuals holding the dual character of executors-cum-trustees. In the above view we have taken, there is no real need to refer, in detail, to the decisions cited by the Revenue viz , V. Raghavalu Naidu and Sons v. CIT [1950] 18 ITR 787 (Mad), Executors of Estate of I. K. Dubash v. CIT [1951] 19 ITR 182 (SC), Estate of Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated, that there is no necessity to apply any of the principles laid down by the above decision. We now turn to the alternative contention, viz., even assuming that these movable assets came to vest in the trustees on the demise of the testator, yet the income had to be assessed on the trustees as association of persons, but not in the hands of the individual beneficiaries. In this context, reliance is placed on cls. 1, 8, 9, 10, 11 and 20 of the will in support of their above contention. We have already referred to these clauses while dealing with the other point. The emphasis is made on the following circumstances: (a) The properties had been vested with the trustees until the time of discharge of all the liabilities pertaining to the estate. (b) The trustees shall take possession of the property and without stoppage carry on the hotel business for the benefit of the testator's sons. (c) All the liabilities due to bank, private parties and taxes shall be discharged out of the amounts payable to the nine beneficiaries (sons of the testator). (d) The trustees are authorised to borrow for the purpose of discharging any of the liabilities and to offer security for such borrowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e receivable for the benefit of the beneficiaries, and (2) the individual shares of the beneficiaries are indeterminate or unknown. This takes us to the question whether, in the circumstances of the case, the individual shares of the beneficiaries are indeterminate or unknown as contended by the Revenue or determinate or known as argued by the assessee, which contention found favour with the Tribunal. The test is whether the individual shares of the beneficiaries are indeterminate or otherwise. What is material, therefore, is whether under any instrument, be it testamentary or non-testamentary, the share of every beneficiary, if there are more than one, is quantified in the deed itself. It would, therefore, follow that it is unnecessary whether, in the instrument, such specified share is quantified in terms of rupees, and paise or not. That in our view is what is visualised under s. 164 of the Act. It is not in dispute that the shares of the beneficiaries are specified in the will of late Seetharama Rao. The beneficiaries are the sons born to the first and second wives of late Seetharama Rao and all the beneficiaries according to the tenor of the document have to take the income eq ..... X X X X Extracts X X X X X X X X Extracts X X X X
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