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TMI Blog2000 (5) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... able in the status of AOP he should be assessed to tax at the ordinary rate applicable to AOP with all available statutory deductions and not at the specified rate as set out in s. 21AA of the WT Act, 1957. 2. For the sake of convenience, these appeals are disposed of by this common order as below. 3. The assessee filed the returns of wealth declaring NIL wealth. The assessee claimed status as "Trade Association", whereas in income-tax returns it was claimed as "AOP". It is submitted before AO by the assessee that, constitution of the assessee association was passed in the year 1928 and, strength of the members at the end of different financial years were 269 on 31st March, 1981; 262 at 31st March, 1982; 262 on 31st March, 1983; and 258 on 31st March, 1984; that assets of the association were only of movable nature such as investments in Government Securities, co-operative societies, furniture, etc. and there were no immovable properties. During the assessment proceedings, the AO asked the assessee, whether any of its members have ever declared their interest in the assets of the association in their wealth-tax returns. From the reply of assessee, the AO found that no member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a society registered under the Societies Registration Act, 1860, wherein the Individual Shares of their members in the income or assets or both on the date of its formation or at any time thereafter are indeterminate or unknown, the wealth-tax shall be levied upon such association and society. The learned Authorised Representative submitted that after insertion of s. 21AA, the question arose whether the share of members of appellant association is indetermined or unknown, the learned Authorised Representative pointed out that the reply of this question is available in art. 60 of rules and regulations relating to the Constitution of the Association. And that in accordance with said art. 60 the share of all members is equal, that means share of members are determined. The learned Authorised Representative relied upon a decision of Hon'ble Gujarat High Court in the case of Padmavati Jaykrishna Trust Anr. vs. CWT (1966) 61 ITR 66 (Guj). The learned Authorised Representative pointed out that in the said judgment the Hon'ble Gujarat High Court reversed the decision of the Tribunal and held that the number of beneficiaries as also their shares both were known and determinate. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inary rate and not at the maximum marginal rate, it is not the intention of the circular that s. 167A is not applicable on those association. 8. In rejoinder, the learned Authorised Representative submitted that there is fundamental difference between s. 167A of the IT Act and s. 21AA of the WT Act, as in IT Act AOP falls under the meaning of person whereas in the WT Act there is no such position, the WT Act never taxed AOP as entity, but it is tax due to s. 21AA, only on the condition that members' share are indeterminate or unknown. In this respect the Authorised Representative submitted that the Hon'ble Supreme Court has discussed this issue elaborately in the judgment of Ellis Bridge Gymkhana. 9. We have considered the rival contentions of both the parties, perused the records and gone through the decisions cited by the learned Authorised Representative. The legislature in its wisdom while enacting the WT Act, 1957, brought within its ambit individual, HUF and company as units of assessment. It will not be right to presume that the legislature was unaware of the wording of the charging section of the Indian IT Act when the WT Act was enacted. The legislature must be presu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f members—indeterminate or unknown" with reference to ss. 21(1) and 21(4) of the WT Act in the case of Padmavati Jay Krishna Trust Anr. vs. CWT. In the said case, the terms of the trust deed were that the income from the trust properties was payable to the daughter-in-law of the settlor for her life and thereafter the corpus was to he divided and distributed in equal shares amongst the male children of the settlor's son. Under the facts of that case, whether it would be possible to say that the number of the. beneficiaries and their shares were indeterminate. Under the deed of trust dt. 30th Dec., 1945, the trustees are to hold the trust property in the trust to pay the income thereof to said Padmavati during her life time and, on the happening of the event, i.e., her death, in trust for the male child or children of Jaykrishna for their use and benefit absolutely in equal shares to the intent and effect that the share of each male child shall be a vested interest in such child so that in case any such child were to predecease said Padamavati, the representative of such predeceased child would take the share which he would have taken had he been alive, to be divided, paid and tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The corpus was to be notionally divided into 175 equal units. Five of the units were to constitute a 'Family Trust Expenses Fund'. The remaining 166-1/2 units were allotted to the relatives mentioned in the Sch. II in the manner specified in the Schedule, the number of units allocated to each individual relative being mentioned there. The Sch. II was divided into two parts. In Part I of the Sch. II were mentioned his wife, Laila Bagum, her five sons and two daughters and his another wife, Jani Begum, and her minor son. In Part II of the Sch. II were mentioned the other wives, sons, daughters, daughters-in-law, sons-in-law, would-be-sons-in-law and certain ladies of rank. None of the beneficiaries mentioned in the Sch. II whether in Part I or Part II, was to be entitled to the corpus of the units allotted to him or her. Each was entitled to be paid the income from the units allocated to him or her and provision was made for the manner in which the units were to devolve after his or her death. The scheme of devolution generally was that after his or her death the corpus of the units allocated to him or her would descend to his or her issue or remoter issue per stirpes, a son taking t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the beneficiaries and on what determinate shares, sub-s. (1) of s. 21 must apply and it would be a matter of no consequence that the number of beneficiaries may vary in the future either by reason of some beneficiaries ceasing to exist or some new beneficiaries coming into being. Not only does this appear to us to be the correct approach in the application of sub-s. (1) of s. 21, but we find that this has also been the general consensus of judicial opinion in this country in various High Courts during the last about thirty years. The first decision in which this view was taken was rendered as far back as 1945 by the Patna High Court in Khan Bahadur M. Habibur Rehman vs. CIT (1945) 13 ITR 189 (Pat) and since then this view has been followed by the Calcutta High Court in Suhashini Karuri vs. WTO (1962) 46 ITR 953 (Cal), the Bombay High Court in Trustees of Putlibai R.F. Mulla Trust vs. CWT (1967) 66 ITR 653 (Bom) and CWT vs. Trustees of Mrs. Hansabai Tribhuwandas Trust (1968) 69 ITR 527 (Bom) and the Gujarat High Court in Padmavati Jaykrishna Trust vs. CWT. The Calcutta High Court pointed out in Suhashini Karuri's case: 'The share of a beneficiary can be said to be indeterminate i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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