TMI Blog1962 (7) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... erred son and his grandchildren. The marriage expenses of his grand- children, whether male or female, have to be met from the income of the properties included in the trust deed. After the said Thiruvengadam Chetty's death, his male grandchildren were to become the absolute owners sharing equally the properties mentioned in the schedule to the deed in question, subject to the maintenance and marriage expenses of the donor's female grandchildren. The trust was to cease after the death of the said Rajamannar and on the male grandchildren completing the age of 21 years. The question that arose was at what rate and in what status the income from the trust properties was to be taxed. For the assessment year 1955-56, a return under section 22(1) of the Act was submitted on December 15, 1955, by the aforementioned Rajamannar Chetty in his individual capacity declaring a total income of ₹ 4,491. Since the Income-tax Officer felt at the time of hearing that the properties in question did not belong to the said Rajamannar Chetty in his individual capacity but belonged to the trustees mentioned in the aforementioned deed of trust, the said Rajamannar Chetty filed a revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intenance out of the income of the schedule properties. He can only enjoy the fruits of income of the schedule properties for his life only. And after the death of my son, my male grand- children shall be the absolute owners in equal share of the schedule properties, subject to the maintenance and marriage expenses of my female grand- children. 5. The trustees shall have no power to sell, mortgage or otherwise transfer the immovable properties hereby given in trust or any part thereof. But, they shall be at liberty to grant lease for terms not exceeding three years. 6. In case of any vacancy in the board of trustees, caused by death, resignation or otherwise, the same shall be filled up by nomination by the remaining trustees. Pending the nomination of the new trustee or trustees, the remaining trustee or trustees shall continue to administer the trust property. 7. The trustees shall hold the schedule properties in trust for the benefit and maintenance of my son and my grandchildren. After the death of my son, and after my male grandchildren completing the age of 21 years, this trust shall cease and the trust properties shall immediately and absolutely vest in my male gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a trust deed and the properties included therein are trust properties. It is also clear that the beneficiaries under that deed are indeterminate. The trust will come to an end on the date specified in the trust deed. The possibility of Rajamannar Chetty getting more male children subsequent to the assessment years could not be ruled out. But, it is contended on behalf of the assessee that a trustee is the owner of the properties conveyed to him under the trust; he does not hold those properties on behalf of others; he only holds them for the benefit of others; section 41(1) and the first proviso thereto contemplates persons who hold the properties on behalf of others and therefore those provisions are inapplicable to cases of trustees as such, as in the present case. In this connection strong reliance was placed on the decision of the Supreme Court in W.O. Holdsworth v. State of Uttar Pradesh [1958] 33 I.T.R. 472; [1958] S.C.R. 296. In that case, their Lordships were called upon to pronounce on the scope of section 11(1) of the U.P. Agricultural Income-tax Act, 1948, which reads: Where any person holds land, from which agricultural income is derived, as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncile seemingly conflicting words and take the provision as an integrated whole. Both section 41(1) as well as the first proviso to the same specially deal with trusts and trustees . The expression trust is well known in law, though not defined in the Act . For finding out the meaning of the word trust we have to fall back on the Trusts Act. On an examination of the deed in question, we are left in no doubt that it is a trust deed and there was a validly constituted trust. If section 41(1) as well as the first proviso thereto applies to trusts, in our mind, there is no doubt about that, merely because the Legislature used the expressions are entitled to receive on behalf of any person and on behalf of any one person, or where the individual shares of the persons on whose behalf they are receivable are indeterminate or unknown , there is no justification to say that income from trust properties does not fall within the scope of section 41(1) or the first proviso thereto. Therefore, it is reasonable to construe the expressions mentioned above as being equivalent to for the benefit of other person or persons . I am aware that it is a hard thing to say that the Legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X
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