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TMI Blog1979 (2) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... inted trustee of the properties. He was to hold them in trust for the benefit and use of Radhakrishna Chetty and Gopalakrishna Chetty and all other sons that may be born to him thereafter till the eldest son completed the age of 21 years ". In accordance with the trust deed, the official trustee, Madras, took possession of the properties. After the trust deed, three more sons were born to the author of the trust, namely, Vitta Mohankrishna Chetty, Vitta Muralikrishna Chetty and Vitta Anandakrishna Chetty. After Vitta Radhakrishna Chetty attained 21 years of age, the three sons of the author of the trust filed Q. P. No. 23 of 1952 in the High Court for appointing the first of them, or any other person as guardian of the two minors. Another application was filed by all the five sons of the author of the trust for directing the official trustee to hand over the properties to them. The above original petition and the application were disposed of by the High Court in February, 1952. It was contended in these proceedings on behalf of the sons of the author of the trust that only such sons of the author of the trust as were born before the eldest of them completed the age of 21 years were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tees should have been assessed under s. 21(1) of the W.T. Act and not under s. 21(4). The assessments were, therefore, set aside with a direction to the WTO to redo the same in accordance with its order. The question already set out has been referred as arising out of this order. Section 21(1) of the W.T. Act, 1957, so far as it is material, runs thus : " In the case of assets chargeable to tax under this Act, which are hely 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 ....... 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 or for whose benefit the assets are held, and the provisions of this Act shall apply accordingly. Sub-section (4) of s. 21, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the like manner and to the same extent " as the beneficiary. The Supreme Court points out that there are three consequences resulting from the application of sub-section (1). They are : (1) In the first place, it follows inevitably from this proposition that there would have to be as many assessments on the trustee as there are beneficiaries with determinate and known shares, though for the sake of convenience, there may be only one assessment order specifying separately the tax due in respect of the wealth of each beneficiary. (2) Secondly, the assessment of the trustee would have to be made in the same status as that of the beneficiary whose interest is sought to be taxed in the hands of the trustee, and (3) Lastly, the amount of tax payable by the trustee would be the same as that payable by each beneficiary in respect of his beneficial interest, if he were assessed directly. At page 598, in dealing with s. 21(1) and (4), the Supreme Court points out : " The correct interpretation of sub-section (4) of section 21 must, therefore, be that even where the beneficiaries of the remainder are indeterminate or unknown the trustee can be assessed to wealth-tax in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee of Madras shall have in the management of the trust properties all the powers usually vested in him as official trustee and shall be entitled to charge the Trust estate the commission and other charges payable to him under the rules. " The main dispositive clause which we have extracted above, particularly the words emphasised, contemplates the official trustee holding the property for the benefit and use of not only the two sons who were in existence, but also other sons to be born. It is not in dispute that the author had five sons. All the five sons became entitled to the estate as beneficiaries under the trust deed. Even where the share of each of the beneficiary is not specified, the rule of construction of the document that is applied is that each one of them takes equally. If there are, however, indications to the contrary, then that indication would have to be given effect to. It is only in the absence of such indication, that the rule of equality, of shares will apply. Thus, in this case, each beneficiary has one-fifth share in the corpus. The learned counsel for the revenue submitted that the trust deed did not indicate that the properties are to vest in any one a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such a way as to do acts necessary for charitable purposes and to meet the maintenance expenses of their children and grandchildren, and the female children that might be born to them in future, and to male children born to the said female children. After payment of taxes and meeting expenses for repairs and maintenance of the properties, the mutawalli was to utilise the balance of the income for the daily household and food expenses and dress and other necessities of the then male and female members of the tarwad and for conducting certain religious and charitable ceremonies. Out of the balance, if any, the mutawalli was directed to acquire properties yielding good income. The question arose whether the first proviso to s. 41(1) of the Indian I.T. Act, 1922, applied and the mutawalli was assessable on the income of the properties at the maximum rate, on the basis that the shares of the beneficiaries were indeterminate or unknown. It was held that although the number of beneficiaries was ascertainable at any given point of time, the beneficiaries had no specified share in the income of the properties but had only a right to be maintained. The individual shares of the beneficiarie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad attained majority. The question was whether the respondent was liable to be assessed to wealth-tax in respect of the trust properties under s. 21(1) of the W.T. Act, 1957. It was held that the trustee held the trust properties " on behalf of " others within the meaning of s. 21(1) and was assessable to wealth-tax under s. 21 ; since on the relevant valuation dates, the respondent and his wife had a right to be maintained out of the income of the trust properties, and they also had a right of residence in the house situate in that property and the sons had a right to be maintained and educated, the shares of the beneficiaries were found to be indeterminate and the trustees had to be assessed under s. 21(4). The decision proceeded on the construction of the particular document in the light of the factual situation that existed in that case. There is nothing in that decision which runs contrary to what we have expressed earlier, as flowing from the construction of the document before us. On the construction of the document, we answer the question in the negative, in the sense that the trustees of the estate should be assessed under s. 21(1) and not under s. 21(4) of the W.T. Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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