TMI Blog1974 (12) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment years. Hence, a common reference was made in both the cases. Smt. Indu Bala Sen, widow of late Shri Ashutosh Sen, executed a deed of trust dated the 2nd January, 1956, for the immediate benefit of her two sons, Satipati Ashutosh Sen and Trambak Ashutosh Sen, and two daughters, Anuba Sen and Anita Sen. For the time being the trust was created in respect of a sum of Rs. 50,000 only and the sum was made available to the trustees on the 23rd April, 1958. The first trustees were late Shri P.R. Das, Bar-at-law, and Shri Ujjal Narain Sinha, Bar-at-law, and a third one from among the members of the family of the settlor to be appointed by them. It is not in dispute that Smt. Indu Bala Sen had four sons and four daughters and the family is governed by the Dayabhaga school of Hindu law. A question arose before the Income-tax Officer whether the assessment was to be made in respect of the income from the trust in the hands of the trustees as association of persons under the first proviso to section 41(1) of the Indian Income-tax Act, 1922 (section 164 of Income-tax Act, 1961), hereinafter referred to as " the Act " or the shares of the beneficiaries, i.e., the aforesaid two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to this court do not really depend on the interpretation of the provisions of section 41(1) of the Act. Therefore, it is not necessary to quote or refer to the provisions of that section. The answers to the questions referred depends on the answer to the question whether the share of the beneficiaries named under sub-clause (i) of clause (1) of the trust deed which will be quoted hereafter, is determinate or indeterminate. Answer to this question has to be arrived at with reference to the general law on the subject and interpretation of the trust deed itself. Both Mr. Jagadish Sahay and Mr. J. C. Sinha conceded that : (i) when any interest is held by more than one person, exception the case of a Mitakshara coparcenary, such persons will ordinarily be tenants-in-common and not joint tenants and their shares in the property will be determinate; and (ii) it will also be so in case the interest is created by a deed unless on the construction of the terms of the deed it appears that the intention of the person executing the deed was, not to create a tenancy-in-common and define the shares of the persons in whose favour the deed created the interest. They, however, differed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sen, Trambak Ashutosh Sen, Umapati Ashutosh Sen and Satipati Ashutosh Sen shall die leaving no son, the trustees shall hold the trust fund and the accumulations and income thereof or so much thereof, respectively, as shall not have been applied under the trusts and powers hereinbefore contained in trust for the heirs of the settlor absolutely." In my opinion, the contention of Mr. Sahay has to be accepted and that of Mr. Sinha to be rejected. It is apparent from sub-clause (i) of clause (1) of the deed that Smt. Sen did not intend that, each one of her two sons and two daughters should have equal, i.e., 1/4th, or even definite share in the income of the trust and that should vest in them. She merely conferred upon one of her sons, Trambak Ashutosh Sen, and the two daughters a right to be maintained out of the income of the trust and on the other son, Satipati Ashutosh Sen, a right to be maintained as well as to be educated out of the income of the trust. Three of the beneficiaries were granted merely a right of maintenance whereas the 4th one was granted a right of maintenance as well as education. Prima facie, more money would have to be spent by the trustees on him than on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance and education out of the income of the trust. Their shares were not defined or determined and they could not claim that each one of them had a right to get 1/4th of the income of the trust spent over him. Law discussed and conclusions arrived at as to the interpretation of the terms of the trust deed in the preceding paragraphs are themselves sufficient for answering the two questions referred by the Tribunal for the opinion of this court, but as learned counsel for the department as well as the assessee cited before us some authorities in support of their respective contentions, I also propose to refer briefly to them. In support of his contention Mr. Sinha relied on the following decisions : Jyotishwari Kalimata v. Commissioner of Income-tax, Raja Bahadur Visheshwar Singh v. Commissioner of Income-tax , Commissioner of Income-tax v. Pulin Behari Dey and Commissioner of Wealth-tax v. Trustees of H. E. H. Nizam's Supplemental Family Trust . In Jyotishwari Kalimata's case a Bench of this court held that the deities in each separate group for whose benefit the settlor created a trust by two deeds of the same were to be assessed separately as their shares were well-defined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of this court in Jyotishwari Kalimata's case and also referred to various other decisions. The learned Chief justice in that case had to interpret a trust deed created by the settlor and also a will made by his wife. In the will the charitable purposes were set out and after the payment the executors and trustees of the will were to spend the remainder of the rents and profits on the worship of the two idols for whose benefit the trust was created. The learned Chief justice emphasised this aspect of the matter and observed that " in the will the executors were given an absolute discretion in applying the property for certain objects, but they are given no discretion as to how the remainder of the income is to be applied; that is to be applied to the maintenance and the worship of the two deities. " In the instant case, as observed earlier, there is a direction in the trust deed as to how the remainder (surplus) of the income of the trust is to be applied; it was to be held as accretion to the trust fund by the trustees. The decision in Commissioner of Wealth-tax v. Trustees of H. E. H. Nizam's Supplemental Family Trust also does not support the assessee's contention in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven a determinate share in the income. Reliance was also placed on a provision in the deed that if the income was greater or less than Rs. 2,000 these shares were to be increased or decreased proportionately. Bat there was also a provision in the deed permitting the shebait to alter these amounts at his discretion and, relying on that, the learned Chief Justice held that the taxing authorities were right in holding that the shares of the deities were indeterminate. In Commissioner of Income-tax v. Puthiya Ponmanichintakam Wakf , it was held by the Supreme Court that as according to the wakf deed distribution of family income and family expenses was left to the discretion of mutawalli and the mutawalli was to save sufficient amount for purchasing properties it was a case of indeterminate shares of beneficiaries within the meaning of proviso (i) to section 41(1) of the Act. On the interpretation of the deed it was found that no specified share of the income was given to any of the beneficiaries and their right was nothing more than to be maintained having regard to their reasonable requirements which were left to the discretion of the mutawalli. The trust deed under considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... got a mere right to be maintained or educated, their shares are indeterminate. In my opinion, on the language used in the trust deed under consideration in the case before us there can also be no doubt that under it one of the sons of Smt. Indu Bala Sen has a mere right to be maintained and educated and the other son and two daughters named in sub-clause (i) of clause (1) thereof have a mere right to be maintained out of the income of the trust fund. Their shares in the income of the trust property, in my opinion, cannot be held to be determinate. It has to be held to be indeterminate. I would, accordingly, answer the two questions referred to this court as follows : Question 1: The Tribunal is not right in infusing the idea of tenancy-in-common of the Dayabhaga school of Hindu law in the instant trust deed the same has to be interpreted on its own terms and provisions. Question 2: The Tribunal has not rightly held that the shares of the beneficiaries were determinate and, therefore, the first proviso to section 41(1) of the Act was not applicable; the shares of the beneficiaries named in sub-clause (i) of clause (1) of the deed were indeterminate and the first prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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