9911796707
TMI Blog1977 (7) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... date being 31st March, 1957. One F. E. Dinshaw, since deceased, had created a trust by his will dated July 23, 1934. He died in 1936 leaving behind him vast properties and three children, two daughters, viz., Bachubai and Maneckbai, and one son, Edulji. Long prior to the relevant valuation date Maneckbai, one of the daughters, had died and on the valuation date only Bachubai and Edulji were living. Bachubai was married, but neither Bachubai nor Edulji had any children. The relevant provisions which have an important bearing on the questions involved in the case are to be found in clause 11, sub-clauses (d), (e), (f), (g), (h), (i), (j), (k) and (l), of the will. The testator had directed his trustees that they shall stand possessed of the capital and income of the trust fund in trust to divide the same into three equal shares and to appropriate one of such shares to each one of these three children then living, namely, Bachubai, Maneckbai and Edulji, but each of these children did not get the share absolutely but each one of them had a life interest in the income of the share allotted to each. The Tribunal in the statement of case has summarised the effect of the aforesaid essentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment made by the Wealth-tax Officer, the assessee-bank preferred an appeal to the Appellate Assistant Commissioner and several objections were raised by the assessee to the legality of the assessment made against it, but all those objections were overruled and the AAC confirmed the assessment made by the Wealth-tax Officer. The assessee carried the matter in further appeal to the Appellate Tribunal and before the Tribunal several legal objections as well as objections on merits to the assessment made were raised. In the first place, it was contended that since the assessee was a banking company no assessment under the Wealth-tax Act could be made against it under section 45(a) of the Wealth-tax Act. Secondly, it was urged that since the Wealth-tax Act was not applicable to the assessee-bank section 21(1) of the Act was not applicable and, in any view of the matter, the Wealth-tax Officer having once exercised the option given to him by assessing the beneficiary to wealth-tax, he could not once again make another assessment on the trustees as well. Thirdly, it was urged that the assessment should have been made against the assessee in the status of a company and not in the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trustees of H.E.H. the Nizam's Family decided on May 3, 1977, a copy of which decision was made available to us at the hearing.--[Since reported as [1977] 108 ITR 555 (SC)] As regards the first contention which Mr. Jagtiani urged before us, at the outset it may be stated that question No. 1 as framed by the Tribunal and referred to us, though it involves several aspects, does not cover the specific contention urged by Mr. Jagtiani. It is true that the contention which was urged by Mr. Jagtiani before us was specifically urged before the Tribunal during the course of hearing of the appeal before it and in fact on behalf of the assessee out of five questions that were suggested by the assessee as questions arising out of the Tribunal's order and which should have been referred to this court, the first question as suggested by the assessee in terms covers the point that is sought to be made by Mr. jagtiani before us, but even after as many as five questions were suggested by the assessee to the Tribunal for being referred to this court, the Tribunal has in fact opined that only two questions--those which have been actually framed and referred--arose out of its order and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t wealth of-- (a) a banking company as defined in section 5 of the Banking Companies Act, 1949 ; ........" Mr. Jagtiani pointed out that the amended section attempted to make the position clear that no tax was intended to be levied under the Wealth-tax Act in respect of the net wealth of a banking company, suggesting thereby that if any property was held by a banking company in any representative capacity as a trustee the wealth-tax was intended to be levied thereon but no wealth-tax was intended to be levied only in respect of its assets as a banking company. In contrast, he pointed out that under the old section 45 the provision was to the effect that the provisions of the Act shall not apply to a banking company without making any reference to any net wealth of such banking company ; in other words, the capacity in which the assets were held was immaterial. He, therefore, urged that in the instant case though the assessee-bank was appointed a trustee by F. E. Dinshaw under his will dated July 23, 1934, no assessment on the assessee-bank could be made even in respect of property so held by it as a trustee in view of unamended provision of section 45. The contention so advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in section 2(m), which runs thus : " net wealth " means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in this net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than certain specified debts which have been enumerated therein. " It will thus appear clear from this definition that any property wher- ever located, belonging to " the assessee on the relevant valuation date, would be included in the assets assessable to the wealth-tax. It is obvious that the assets held by a trustee in trust for others cannot be said to be assets " belonging to " the trustee so as to be includible in the net wealth. Reference in this connection may be made to a decision of the House of Lords in the case of Heritable Reversionary Co. Ltd. v. Millar (M'Kay's Trustee) [1892] AC 598, where the question arising under the Bankruptcy (Scotland) Act, 1856, was considered. Lord Macnaghten has observed at page 621 thus : " A man's property ..... X X X X Extracts X X X X X X X X Extracts X X X X
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