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TMI Blog1984 (1) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... he income in this declaration also, nothing was stated about the disposition of the corpus. 3. In 1952, the settlor died without making any further declaration. He was survived by his only son, L.V. Apte. He was at that time also a trustee. His children, i.e., the settlor's grandsons, who were entitled to the life interest, had by a deed poll dated 29-3-1968, surrendered and released their respective life interest in the remainder of the income of the trust properties. Thus, on 29-3-1968, the trust had no beneficiaries. So, on that date, the trustees conveyed the trust properties to the persons who would be entitled to the properties of the settlor on his death, i.e., conveyance was made to L.V. Apte, his son. 4. We are concerned with the wealth-tax assessments in respect of the trust property for the assessment years 1961-62 to 1967-68. Since the settlor died in 1952 without making any provision for the disposal of the corpus of the trust property, under section 83 of the Indian Trusts Act, 1882, the trustees will be holding the corpus of the trust for the benefit of the legal heirs of the settlor. Since the settlor died before the coming into effect of the Hindu Succession Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any provision for charging and assessing the net wealth of a deceased individual beyond the financial year in which the person dies, no assessment could be made. Similarly, in the absence of any specific provision in respect of a dissolved trust, no assessment could be made after its dissolution. He drew a distinction in this matter between section 161 of the Income-tax Act, 1961 ('the 1961 Act') and section 21(1) of the Act. He pointed out that whereas section 161 has provided for a receipt to be assessed in the name of the trustee himself in respect of the income, there is no such provision in section 21. Regarding the second submission he pointed out that section 21(1) has no application for reversionary interest because such an interest must be held by the trustee appointed under a trust declared by a duly executed instrument. In the case before us, he pointed out that there was no such trust under which the HUF had been indicated as the beneficiary. The HUF is the beneficiary only because of the provision of law. The trustees were, therefore, only constructive trustees. The provisions of section 20 of the Act would not apply to such constructive trusts. 9. We are unable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Webster's Dictionary 'belong to' is explained as meaning, inter alia, 'to be owned by', 'be the possession of'. Therefore, the Supreme Court had equated the words 'belong to' to mean not merely full ownership but also interest of lesser degree than full ownership. From this it follows that the trust properties belong to the trustees and the provisions of section 3 would be applicable. 10. We may also refer to the decision of the Supreme Court in the case of CWT v. Kripashankar Dayashanker Worah [1971] 81 ITR 763. In that case, an argument was taken up before the Supreme Court that no assessment could be made on a trust because section 21 referred to properties held by the trust on behalf of the beneficiaries, whereas, in law the properties are held by the trust and the condition is that the properties are held for the benefit of the beneficiaries. The Supreme Court pointed out that the conception in the Act that the trustee is holding the trust property on behalf of others may not be in conformity with the legal position as contemplated by the Indian Trusts Act but the Legislature is competent in the absence of any restrictions placed on it by the Constitution to give its own mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor does not, while the administration is still incomplete, hold the estate or receive its income on behalf of any one else, but does so on behalf of himself as the person in whom the estate lies vested at the time. Even if the executor and trustee be the same person, he does not assume the latter character till the administration has been completed and the residuary legacy ascertained and assented to. Till then, the High Court pointed out, he is liable to be assessed not in a representative capacity but under the general provisions as the owner of the income. Clearly, the position of the executor and the position of the trustee, as far as the vesting of the properties is concerned, are the same. A trustee would also be assessable directly under the general provisions of the Act. 13. The other decision we will refer to is the decision of the Supreme Court in the case of Administrator-General of West Bengal for the Estate of Raja P.N. Tagore v. CIT [1965] 56 ITR 34. The Supreme Court was considering the case of an administrator for the purpose of income-tax assessment. It was pointed out therein that so long as the administration of an estate was not completed, the Administrator-G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. That contention was rejected by this Court. No contention was raised in that case that trustees did not come within the scope of section 3 of the Act. The judgment in that case proceeded on the basis that trustees can be assessed to wealth-tax in respect of the trust property of which they are trustees. There is also no dispute that section 5(1)(i) of the Act proceeds on the basis that a trust property comes within the scope of the Act. Section 3 of the Act does bring within its scope an individual which expression in view of the Central General Clauses Act includes individuals as well, unless the context otherwise indicates. In this case, the context, far from not indicating that the individual does not include individuals, clearly shows at any rate so far the trustees are concerned that it includes individuals. As the Indian Income-tax Act provides for the assessment of 'an association of persons', the context therein may indicate that individual does not include individuals. But such an interpretation is not permissible when we deal with section 3 of the Act. " [Emphasis supplied] It would appear from a reading of the decision that the question not considered in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, that is not sufficient to bring in the assessment under section 21 of the Act. We see the point made out by Shri Inamdar. It is true that section 21 does not cover the obligations in the nature of trust visualised in sections 80 to 85 of the Indian Trusts Act. In that type of fiduciary relationship the provisions of section 21 will not apply. But does this advance the case of the assessee ? In our opinion it does not. Section 21 has been placed in the statute in order to equalise the liability to pay wealth-tax by the trustees to the amount which would have been payable if the beneficiaries were to be assessed direct. It minimises the burden on the trustees. It is a matter of advantage for the trustee who is otherwise assessable under section 3 itself. The Supreme Court has pointed out in Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust's case that the provisions of section 3 are subject to the other provisions of the Act and when a trust is assessed, section 3 has to be read along with section 21. Now, the result of Shri Inamdar's submission would be that the benefit of section 21 would not be available to the assessee. The trustees would be assessable under section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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