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TMI Blog1983 (8) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... assessees are the trusts created by Ramjilal Jhunjhunwala and Purshottamlal Jhunjhunwala, respectively. The assessment years involved are 1971-72 and 1972-73. The trusts were created on the same day and are identically worded. In respect of the trust of Ramjilal Jhunjhunwala, the trust property was certain shares in Oudh Sugar Mills. The shares were to be held for the benefit of Manjuladevi for a period of 10 years. Thereafter, the sole and absolute beneficiary would be the wife of the son of Bhagwatiprasad Jhunjhunwala. At the time of creation of the trust, no son was born to Bhagwatiprasad Jhunjhunwala. However, later a son was born to him. We are concerned with the valuation dates of 31-3-1971 and 31-3-1972. On both these valuation date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application of the maximum rate was valid. As far as the first point is concerned, Shri Doshi has admitted that the point is covered against him by the said Tribunal decision. We would adopt the reasonings given by the Tribunal in the income-tax appeals and hold that the reassessments are valid. 4. With regard to the second point, however, Shri Doshi had a further submission to make. He submitted that the beneficiaries are determinate and known and, therefore, the provisions of section 21(4) would not apply. He submitted that the beneficiary is the future wife of the son of Bhagwatiprasad Jhunjhunwala. It is true that the trust deed did not provide for the contingency of the son not marrying or the contingency of the son dying. However, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of the author of the trust or his legal representative. " It will be seen from the above section that it would be applicable where a trust is incapable of being executed, or in a contingency where the trust is completely executed but the trust property is still very much in existence. In these circumstances, the trustees will be holding the properties for the benefit of the author of the trust of his legal representative. 6. In order to avoid the application of section 21(4) it is necessary that the provisions of section 21(1) would be applicable. Now section 21(1) enjoins the assessment of a trustee direct. The tax liability is co-terminus in quality and quantity with that of the beneficiary if the beneficiary is known and his sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 83 is not possible for the purpose of determining the beneficiary or his share. It is true that the 1882 Act would apply and would govern the relations between the trustees, beneficiaries and the trust property. In many instruments a specific clause is recorded that the provisions of the 1882 Act would apply where the instrument is silent. That proposition can certainly be relied on; but to invoke that, it is necessary that the instrument should subsist. Section 83 is not a section to be applied when the instrument subsists. That section comes into play only where the trust itself fails or the trust objects are exhausted without exhausting the trust property. In the case before us, it will be a case of the failure of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Trustees of H.E.H. Nizam's Family Trust considered the second type of cases, i.e., where there are more than one beneficiary. Since these beneficiaries' shares were subject to fluctuations owing to birth and death, the department took the view that their shares were indeterminate. The Supreme Court rejected the contention and held that one should consider the position on the valuation date only. The Supreme Court was not considering a case where the single beneficiary mentioned in the trust deed was an unknown person who would get a right in the property on the contingency of an event happening. In the reported decision it is observed : ". . The Wealth-tax Officer has to determine who are the beneficiaries . . . on the relevant d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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