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TMI Blog1971 (7) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the case submitted to the High Court may now be briefly stated : The respondent, Kirpashanker D. Worah, by means of a deed of trust dated July 19, 1949, transferred certain shares described in schedule 7 of the trust deed and certain immovable properties and shares in business described in schedule 8 of that deed unto himself as the trustee for making provision for the maintenance of himself, his wife, for the maintenance, education and the marriage expenses of his unmarried daughters and for the maintenance and education expenses of his minor sons. The main purpose of the trust is set out in paragraph 3 of the objects of the trust. That paragraph reads : " To apply the income of the trust estate for the maintenance and the joint use and benefit of the settlor and his wife the said Srimati Kanchan Kunver and also for the maintenance, education and marriage expenses of the said two minor daughters Kumari Kumud Bala and Kumari Jyoti and also for the maintenance and education of the settlor's minor sons Harsukbari Worah and Chanderkant Worah PROVIDED ALWAYS that if the income of the trust estate is insufficient for the purpose of meeting any of the said expenses the trustee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beneficiaries under the trust is not indeterminate, he cannot be taxed at the maximum rate. We shall first take up the question whether the case of the assessee comes within the scope of section 21 (1) of the Act. At the material time section 21 read thus : " 21. (1) In the case of assets chargeable to tax under this Act which are held by a court of wards or an administrator-general or an official trustee or any receiver or manager or any other person, by whatever name called, appointed under any order of a court to manage property on behalf of another, or any trustee appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise including a trustee under a valid deed of wakf, the wealth-tax shall be levied upon and recoverable from the court of wards, administrator-general, official trustee, receiver, manager or trustees as the case may be, in the like manner and to the same extent as it would be leviable upon and recoverable from the person on whose behalf the assets are held, and the provision of this Act shall apply accordingly. " Leaving out the unnecessary words, section 21, to the extent material for our present purpose, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interested in such land or in the agricultural income derived therefrom ". While interpreting that clause this court held that a trustee is not a person who can be equated to a receiver or an administrator inasmuch as those persons hold the property on behalf of other persons whereas trustee is the legal owner of the trust property. In that decision this court also observed that there is a fundamental difference between a property being held on behalf of others and property being held for the benefit of others. In our opinion the ratio of the decision does not bear on the point under consideration though certain observations found therein may give some assistance to the respondent. Section 11 of the U.P. Agricultural Income-tax Act does not refer to trustees at all whereas section 21(1) of the Act specifically refers to trustees. It is true that it refers to a trustee as holding a trust property on behalf of other persons. The conception 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 Trusts Act but the legislature is competent in the absence of any restrictions placed on it by the Constituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kokila Devi, a similar view was taken by this court. In Commissioner of Income-tax v. Manilal Dhanji, this court again proceeded on the basis that section 41 applied to the trustees. In Commissioner of Income-tax v. Managing Trustees, Nagore Durgha, this court was called upon to interpret the scope of section 41(1). Therein the question was whether nattamaigars of the Nagore Durgha, who are considered as trustees in whom the properties of the Durgha vested, would come within the scope of section 41(1) of the Indian Income-tax Act, 1922. This court answered that question in the affirmative. Therein also it was contended that as the property is vested in the managing trustee and he received the income in his own right and not on behalf of the beneficiaries, though for their benefit, the income in the hands of the managing trustee fell outside the scope of section 41(1) of the Act. Repelling that contention Subba Rao J. (as he then was), speaking for the court, observed : " There are two answers to this contention. The doctrine of vesting is not germane to this contention. In some of the enumerated persons in the section the property vests and in others it does not vest, but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Karuri v. Wealth-tax Officer, Calcutta, the High Court of Calcutta held that the words " on behalf of " used in section 21(1) of the Act are synonymous with the expression " for the benefit of ". It further held that notwithstanding that the trustees hold property for the benefit of beneficiaries and not on their behalf, section 21(1) applies to them and they are liable to wealth-tax only " in the like manner and to the extent as it would be leviable upon and recoverable from any such beneficiary ". The Calcutta High Court distinguished the decision of this court in Holdsworth's case. The Bombay High Court in Trustees of Gordhandas Govindram Family Charity Trust v. Commissioner of Income-tax, disagreeing with the decision under appeal and following the decision of the Calcutta High Court in Suhashini Karuri's case, took the view that a trustee also came within the scope of section 21(1) of the Act. The same view was taken by the Allahabad High Court in Chintamani Ghosh Trust v. Commissioner of Wealth-tax. We think that the view taken by the Calcutta, Bombay and Allahabad High Courts is the correct view. Now coming to the question whether the shares of the beneficiaries under th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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