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TMI Blog1983 (8) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... unwala, the trust property was certain shares in Oudh Sugar Mills. The shares were to be held for the benefit of Manjuladevi for a period of 10 years. Thereafter, the sole and absolute beneficiary would be the wife of the son of Bhagwatiprasad Jhunjhunwala. At the time of creation of the trust, no son was born to Bhagwatiprasad Jhunjhunwala. However, later a son was born to him. We are concerned with the valuation dates of 31-3-1971 and 31-3-1972. On both these valuation dates, the son of Bhagwatiprasad Jhunjhunwala had not married. The provisions of the trust created by Purshottamlal Jhunjhunwala are identical. There also, the beneficiaries are Manjuladevi for 10 years, and later the future daughter-in-law of Bhagwatiprasad Jhunjhunwala. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reassessments are valid. 4. With regard to the second point, however, Shri Doshi had a further submission to make. He submitted that the beneficiaries are determinate and known and, therefore, the provisions of section 21(4) would not apply. He submitted that the beneficiary is the future wife of the son of Bhagwatiprasad Jhunjhunwala. It is true that the trust deed did not provide for the contingency of the son not marrying or the contingency of the son dying. However, even then, according to Shri Doshi, the beneficiary will be known and determinate. That is because, according to him, the provisions of section 83 of the Indian Trusts Act, 1882 ('the 1882 Act') would become applicable and the trustees will be holding the properties f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... still very much in existence. In these circumstances, the trustees will be holding the properties for the benefit of the author of the trust of his legal representative. 6. In order to avoid the application of section 21(4) it is necessary that the provisions of section 21(1) would be applicable. Now section 21(1) enjoins the assessment of a trustee direct. The tax liability is co-terminus in quality and quantity with that of the beneficiary if the beneficiary is known and his shares determinate. Section 21(1) would apply only in certain categories of assessees. They are the Court of Ward, Administrator General, Official Trustee, etc., or 'any trustee appointed under a trust declared by a duly executed instrument in writing'. Only in suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic clause is recorded that the provisions of the 1882 Act would apply where the instrument is silent. That proposition can certainly be relied on; but to invoke that, it is necessary that the instrument should subsist. Section 83 is not a section to be applied when the instrument subsists. That section comes into play only where the trust itself fails or the trust objects are exhausted without exhausting the trust property. In the case before us, it will be a case of the failure of the trust if and when section 83 is made applicable. So, the beneficiary located with the help of section 83 is not a beneficiary given in the trust deed itself. Therefore, it is not a beneficiary contemplated under section 21(1). 9. Shri Doshi had referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat their shares were indeterminate. The Supreme Court rejected the contention and held that one should consider the position on the valuation date only. The Supreme Court was not considering a case where the single beneficiary mentioned in the trust deed was an unknown person who would get a right in the property on the contingency of an event happening. In the reported decision it is observed : ". . The Wealth-tax Officer has to determine who are the beneficiaries . . . on the relevant date and whether their shares are indeterminate or unknown. It is not at all relevant whether the beneficiaries may change in subsequent years before the date of distribution. . .". Thus, the Supreme Court decision is relevant where there are more than ..... X X X X Extracts X X X X X X X X Extracts X X X X
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