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TMI Blog1966 (4) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... o appointed himself as trustee of the trust estate. The assessee objected to the assessment and went in appeal to the Appellate Assistant Commissioner of Wealth-tax. Bhagalpur Range, who annulled the assessments. There was an appeal before the Income Tax Appellate Tribunal. Patna Branch, by the Wealth-tax Officer, where the assessments as originally made were restored. The assessee made an application for reference to the Appellate Tribunal under Section 27(1) of the Act and the question framed for consideration of this Court is: Whether in the facts and circumstances of the case, the trustee under the Trust deed dated 19th July 1949 executed by Kripashankar D. Worah was assessable to Wealth Tax under Section 21 of the Wealth Tax Act 3. The trust deed provided that the settlor himself will be trustee. Shares of public limited companies described in Schedules 1, 2, 3 and 4 of the deed had been given absolutely to the two major sons of the settlor and so also the shares given in Schedules 5 and 6 to his two minor sons. They were excluded from the trust estate. Having said that the settlor provided that being desirous of making provisions for the maintenance of his wife, maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets chargeable to tax under this Act which are held by a court of wards or an administrator-general or an official trustee or any receiver or manager or any other person, by whatever name called, appointed under any order of a court to manage property on behalf of another, or any trustee appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise (including a trustee under a valid deed of wakf), the wealth-tax shall be levied upon and recoverable from the court of wards, administrator-general, official trustee, receiver, manager or trustee, as the case may be, in the like manner and to the same extent as it would be leviable upon and recoverable from the person on whose behalf the assets are held, and the provisions of this Act shall apply accordingly. 2. Nothing contained in Sub-section (1) shall prevent either the direct assessment of the person on whose behalf the assets above referred to are held, or the recovery from such person of the tax payable in respect of such assets. 3. Where the guardian or trustee of any person being a minor lunatic or idiot (all of which persons are hereinafter in this Sub-section included in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther who is the owner. The way in which wealth tax can be levied in such a case has been indicated to be in the like manner and to the same extent as it would be leviable and recoverable from, the persons on whose behalf the assets are held. Both the leviability and the recovery are co-extensive. In Sub-section (2), therefore, it has been provided that it would be open to the wealth tax officer to make a direct assessment on the person on whose behalf the assets are held by the persons of different categories mentioned in Sub-section (1) and direct recovery of the tax is permitted. That means, it will be open to the department to levy the tax and recover the same from the person to whom the assets belong; but, if they are held on his behalf by another person, such other person may alternatively be liable to tax, as mentioned in Sub-section (1). The assessment when it is made on the person who holds the assets on behalf of another is really a representative assessment and for the purpose of convenience, this special provision has been made under Section 21, which is found in Ch. V of which the heading is liability to assessment in special cases . Sub-section (3) gives another in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust, viz., maintenance of the two sons during their minority, had ceased to exist on account of their attaining majority, yet the maintenance of the settlor and his wife was still to be continued out of the income of the trust property in accordance with the terms of the deed. In that view, the two sons were not at all beneficiaries. With reference to Clause 5, their interest as stipulated therein will only arise when the settlor's wife is dead. As long as that contingency did not happen, no interest accrues to them as provided under that clause. In that view also, it cannot be contended that or! the dates of valuation the two sons had any interest either in the trust property or they were beneficiaries in respect of the trust estate. The purpose of the trust, as mentioned in the first paragraph of the document which I have already stated, included the maintenance and education of the settlor's two minor sons during their minority and, what is provided under Para. 3 in regard to the application of the income of the trust estate, that will be governed by the purposes for which the trust was made. As we read clause five along with the other provisions we understand t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being for his benefit. 8. The position of a trustee in regard to the trust estate was considered by their Lordships of the Supreme Court in the case of W. O. Holdsworth v. State of Uttar Pradesh [1958]33 ITR 472(SC) where the interpretation of Section 11(1) of the U. P. Agricultural Income Tax Act came for examination. The provision of law was that any person who holds land, from which agricultural income is derived, as a common manager appointed under any law for the time being in force or under any agreement or as receiver, administrator or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom, the aggregate of the sums payable as agricultural Income Tax by each person on the agricultural income derived from such land and received by him, shall be assessed on such common manager, receiver, administrator or the like, and he shall be deemed to be the assessee in respect of the agricultural Income Tax so payable by each such person and shall be liable to pay the same. The question that arose there was whether a trustee could be liable to assessment under that provision. Referring to the definition of person as given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner of the trust property and the property vests in him as such. He no doubt holds the trust property for the benefit of the beneficiaries but he does not hold it on their behalf. The expression 'for the benefit of and 'on behalf of are not synonymous with each other. They convey different meanings. The former connotes a benefit which is enjoyed by another thus bringing in a relationship as between a trustee and a beneficiary or cestui que trust, the latter connotes an agency which brings about a relationship as between principal and agent between the parties, one of whom is acting on behalf of another. There cannot thus be any doubt that the expression on behalf of as used in Section 21 of the Wealth Tax Act cannot be taken as synonymous with for the benefit of and, therefore, a trustee who holds the assets for the benefit of the beneficiaries cannot be assessed under Section 21 of the Wealth Tax Act. 10. Learned Counsel appearing for the opposite party, the Commissioner of Wealth Tax, relied upon a decision of the Calcutta High Court in Suhashini Karuri v. Wealth-tax Officer, Calcutta [1962]46ITR953(Cal) where Section 21 of the Act was under consideration. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use there the consideration was in regard to the provisions under Section 41 of the Indian Income Tax Act. That provision relates to the income and not to the corpus of the estate. Whatever that may be, since we are now concerned with the trust estate and not the income out of the trust estate, the cases dealing with Section 41 of the Indian Income Tax Act cannot have any relevancy for the purposes of our consideration. 12. Our attention was drawn to Act 40 of 1964, Section 20 which has amended in 1964, Section 21 of the Wealth-tax Act by including the expression for the benefit of in relation to the trustees in addition to the existing expression on behalf of. For the years under consideration in the present four reference cases, the amendment has no application. It was suggested that the inclusion of the expression for the benefit of by way of an amendment was felt necessary on account of the view expressed by the Supreme Court in the case of [1958]33 ITR 472(SC) , bringing out that a trustee does not hold the trust property on behalf of the beneficiary, but he holds that only for their benefit. Learned Counsel for the opposite party referred us to the aims and objects ..... X X X X Extracts X X X X X X X X Extracts X X X X
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