TMI Blog1985 (11) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... are the calendar years preceding the assessment years. The assessees, it will be noted, are the trustees of the Staff Gratuity Fund of Shree Ram Mills Ltd. The trust was brought into existence by an indenture dated November 11, 1953, between Shree Ram Mills Ltd., as the settlor, and Pratap Bhogilal, Naraindas Menghraj and Nagardas Chaturdas, as the trustees. A copy of the indenture has been exhibited. The indenture recites that Shree Ram Mills were " desirous of setting aside and creating a fund for payment of gratuity to, inter alia, the class of their employees covered by the judgment of the Industrial Court of Bombay in References Nos. 43 of 1947 and 17 of 1948 and also to such others whom the Mills by reason of their long and/or faithful service consider to deserve a gratuity ". It also recites that for the purpose " of securing the gratuity payable as aforesaid to the said class of employees covered by the judgment of the said Industrial Court in the said reference and the same or any other gratuity to such other employees whom the Mills consider deserving ", the Mills bad paid to the trustees a sum of Rs. 2,29,850-8-0 and were desirous of irrevocably settling the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent as would be levied and recoverable from the Mills' employees. The Tribunal accepted the assessees' submission. It was the submission of Mr. Jetly, learned counsel for the Revenue, that the beneficiaries under the indenture and their shares were indeterminate; and that it was imperative that the indenture should specify the beneficiaries and their shares for section 161 to apply. Mr. Jetly relied upon the fact that the employees of the Mills eligible to obtain gratuity under the indenture were not only those covered by the judgment of the Industrial Court but also those whom the Mills nominated. He also pointed out that the employees who were dismissed got no gratuity. These provisions in the indenture, in his submission, made it patent that the body of beneficiaries under the indenture was fluctuating. Mr. Kolah, learned counsel for the assessee, submitted that it was known at the end of each accounting year on whose behalf the trustees had received the income of the trust, being those employees who were eligible under the Industrial Court's judgment and those employees who had been nominated by the Mills. Hence, in his submission, section 164 did not apply and the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his section referred to as the beneficiaries) are indeterminate or unknown, tax shall be charged as if such income or such part thereof were the total income of an association of persons, or where such income or such part thereof is actually received by a beneficiary, then at the rate or rates applicable to the total income or total world income of the beneficiary if such course would result in benefit to the Revenue. " Under section 160, the trustees appointed under a trust in writing are a representative assessee in respect of income which they receive or are entitled to receive on behalf of, or for the benefit of, any person and are deemed to be an assessee for the purposes of the Act. Under section 161, tax upon such income shall be levied upon and recovered from the representative assessee " in like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him". Where however the person son whose behalf or for whose benefit such income is receivable are indeterminate or unknown or their shares are indeterminate or unknown, tax shall be charged as if such income were the total income of an association of persons. The real qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or where the individual shares of the persons on whose behalf they are receivable are indeterminate or unknown, the tax shall be levied and recoverable at the maximum rate. " The learned judges interpreted the word " or " therein as equivalent to " and " and held that it had to be determined not only what was the quantum of the share but also who was the beneficiary who was entitled to it and the test for the application of the proviso was whether both the shares and the beneficiaries who were to take the same were not indefinite or unknown. In his judgment, Kania J. observed (at page 553), and this is what is relevant here, that the question before the court was necessarily in respect of the accounting year only and did not affect the rights of the parties in respect of the income which might accrue in a later year. In B. P. Mahalaxmiwala v. CIT [1954] 26 ITR 177 (Bom), a Division Bench comprising Chagla C J. and Tendolkar J., found that the aforementioned case of Yakub Versey Laljee [1946] 14 ITR 548 (Bom), had been wrongly decided in that the word " or " used in the proviso was disjunctive and not conjunctive. Towards the end of the judgment, Chagla C.J. noted that Mr. Palkhiv ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
