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TMI Blog1984 (9) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... reated by the trust deed dated 24-2-1969. According to the trust deed, the income of the trust was to be spent or applied for the benefit of Ajit up to the end of the calendar year 1978. After 1-1-1979 the same had to be spent or applied for the benefit of Mrs. Tara during her lifetime. From and after the death of Mrs. Tara, the trust was to be determined and the trust funds were to be distributed to the persons mentioned in clause 3C of the trust deed. 3. The property of the trust consisted of the shares of Parle Products (P.) Ltd. The WTO held that the entire wealth of the trust was liable to be included in the net wealth to be assessed in the hands of the trustees under section 21 of the Wealth-tax Act, 1957 ('the Act'). He, accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is corollary to the third ground. 6. In the cross-objection filed by the assessee, the first ground raised is that the AAC should have determined the value of the shares. The second ground is that the AAC should have decided the other grounds raised by the assessee. 7. In the appeal filed by the assessee, the ground raised is that the order of the conditional annulment of the assessment was erroneous and that the learned AAC ought to have held that the trustees were liable to be assessed in like manner and to the same extent as the beneficiaries, in view of the fact that the returns submitted by the beneficiaries had not been acted upon by the WTO. 8. The contention of the learned departmental representative before us is that the trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trustees in their absolute discretion shall think fit." 11. The contention on behalf of the assessee, is that since on the relevant valuation date, the trustees had in fact not exercised the discretion conferred on them by clause 3E, the provisions of the said clause should be ignored and we should confine ourselves to the remaining clauses of the trust deed. Under the remaining clauses, the beneficiaries are known and their shares are determinate. Consequently, according to the assessee, the provisions of section 21(1) would apply, and, as such, the value of the interests of the beneficiaries should be assessed under the said provisions. 12. A perusal of the trust deed indicates that Mrs. Tara acquired life interest in the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant valuation date. What is to be seen is that what the trustees could have done in exercise of the discretion in order to determine this question and not what they actually did. On this point, we are supported by the decision of the Bombay High Court in B.P. Mahalaxmiwalla v. CIT [1954] 26 ITR 177. The question in that case had arisen in connection with section 41(1) of the Indian Income-tax Act, 1922, and the proviso to the said section. The said proviso was identical with the provision with which we are concerned. In the trust deed with which their Lordships were concerned, a discretion had been given to pay out of the corpus any amount for other purposes. Under the proviso to section 41(1), a heavier liability upon the income received f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en. 14. We may mention here that the learned representative for the assessee had relied on the decision of the Tribunal rendered in the case of another trust [WT Appeal Nos. 575 to 581 (Bom.) of 1983 dated 25-10-1983]. The aspect which we have emphasised and which is material has not been considered in the said decision. Consequently, that decision is no assistance in the present case. 15. After carefully considering all the relevant clauses of the trust deed, we find that clause 3E was applicable with effect from 1-1-1979 and, as such, from 1-1-1979 and 31-3-1979, which is the relevant valuation date, the trustees under the said provision in the trust deed could have applied the trust fund in their absolute discretion given to them in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is obvious that up to the date of the order of the AAC, the beneficiaries had not been assessed under section 21(2). In the circumstances, there was no propriety in making a conditional order as was done by the learned AAC. That direction cannot be sustained. 18. We have already held that in view of clause 3E, the beneficiaries were not known and their shares were indeterminate on the relevant valuation date (31-3-1979) and, as such, provisions of section 21(4) were attracted. In the circumstances, the trustees are to be assessed in accordance with the said provision. 19. As already stated, the AAC has not decided the other grounds raised before him, one of which is regarding the value of shares. We, therefore, hereby restore the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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