TMI Blog1957 (9) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... llahabad raises a question of the interpretation of section 11(1) of the U.P. Agricultural Income-tax Act, 1948 (III of 1949) (hereinafter referred to as " the Act "). The appellants are the trustees of the estate settled on trust under the last will and testament dated May 17, 1917, of one J. J. Holdsworth which inter alia comprised of a certain zamindari estate known as the Lehra Estate situate in the District of Gorakhpur, Uttar Pradesh. The clauses of the will so far as they are relevant for the purpose of this appeal provided that the trustees were to take possession of all real property in the United Provinces of Agra and Oudh and elsewhere in British India (including the houses at Lehra and Gorakhpur and the grounds thereof) and all live and dead stock in or about his estate in British India or any buildings thereon and the contents of any houses or stabling in British India belonging to him (which was called his estate) and manage the same in all respects and in such manner as they shall deem most advantageous and with all the powers of absolute owners. The trustees were to stand possessed of the net rents and profits of the settled estate after payment of the governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly as it left the hands of the various tenants who paid rent or from self-cultivation that was done by the trustees themselves. The trustees then moved an application under section 24(2) of the Act before the Agricultural Income-tax Board, U.P., for reference of certain questions of law to the High Court for its decision. The said Board, however, decided to act under the third proviso to section 24(2) of the Act and to consider the questions of law itself instead of referring them to the High Court for its decision. In the exercise of this power the Board held inter alia that the entire property vested in the trustees and that the latter could not claim the benefit of section 11 of the Act and refused to make a reference. The trustees moved an application under section 24(4) of the Act before the High Court of Judicature at Allahabad praying that the High Court may be pleased to require the Agricultural Income-tax Board, U.P., Lucknow, to state a case and to refer to the High Court certain questions of law arising in the case. The application was allowed by the High Court on February 5, 1953, and an order was passed directing the said Board to refer the relevant question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with, and subject to, the provisions of the Act and rules framed under clauses (a), (b) and (c) of sub-section (2) of section 44, on the total agricultural income of the previous year of every person. " Person " is defined in section 2(11) to mean an individual or association of individuals, owning or holding property for himself or for any other, or partly for his own benefit and partly for that of another, either as owner, trustee, receiver, manager, administrator, or executor or in any capacity recognized by law, and includes an undivided Hindu family, firm or company but not to include a local authority. According to the above definition the trustees before us would be included in the definition of " person " and would as such be liable to agricultural income-tax under the charging section. That liability to pay income-tax would however be on the trustees as a " person " without anything more. Where however section 11(1) comes into operation the agricultural income-tax would be assessed not on the ordinary computation but on the computation specified therein which has the effect of reducing the incidence of the tax by reason of the person being liable to pay only the aggregate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as receiver, manager, administrator or the like and would be liable to pay the agricultural, income-tax on the agricultural income derived by him from the land which he thus held. If there was nothing more, the incidence of the tax would be on the total income which has come to his hands. But, in so far as he holds the land from which agricultural income is derived as such common manager, receiver, administrator or the like on behalf of the persons jointly interested in such land or in the agricultural income derived therefrom, the agricultural income-tax is levied not on the computation of the whole agricultural income which has come to his hands but is limited to the aggregate of the sums payable as agricultural income-tax by each of the persons jointly interested in such land or in the agricultural income derived therefrom and received by him. The agricultural income-tax in such cases is determined with reference to each of the persons jointly interested in such land or in the agricultural income derived therefrom, and the agricultural income-tax payable by each of such persons is computed on the actual amount of the agricultural income derived from such land and received by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... managers, administrators or the like but cannot be predicated of owners or trustees who are equally with the manager, receiver, administrator or the like, included within the definition of " person " contained in section 2(11) of the Act. The case of the owner does not require any elaboration. He holds the land on his own behalf and also for his own benefit. He certainly cannot come within the scope of section 11(1) of the Act. The position of a trustee is also similar to that of the owner. A trust is thus defined in English law : "A trust, in the modern and confined sense of the word is a confidence reposed in a person with respect to property of which he has possession or over which he can exercise a power to the intent that he may hold the property or exercise the power for the benefit of some other person or object." (Vide Halsbury's Laws of England, Hailsham Edition, Vol. 33, page 87, paragraph 140). " The property affected by the confidence is called the trust property or trust estate. It is usually in the legal ownership or under the legal control of the trustee. The cestui que trust is said to have a beneficial or equitable interest in it. " (Ibid., page 89, parag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly has a right against the trustee as owner of the trust property. The trustee is thus the legal owner of the trust property and the property vests in him as such. He no doubt holds the trust property for the benefit of the beneficiaries but he does not hold it on their behalf. The expression " for the benefit of " and " on behalf of " are not synonymous with each other. They convey different meanings. The former connotes a benefit which is enjoyed by another thus bringing in a relationship as between a trustee and a beneficiary or cestui que trust, the latter connotes an agency which brings about a relationship as between principal and agent between the parties, one of whom is acting on behalf of another. Section 11(1) therefore can only come into operation where the land from which agricultural income is derived is held by such common manager, receiver, administrator or the like on behalf of, or in other words, as agent or representative of, persons jointly interested in such land or in the agricultural income derived therefrom. Even though such persons were the beneficiaries cestui que trust under a deed of trust, they would not be comprised within the category of persons on who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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