RAJAMANNAR G T Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference under s. 66 (1) of the Indian IT Act, 1922 (to be referred to as the "Act" hereinafter), was made by the Tribunal (Hyderabad Bench), at the instantce of the assessee. The question of law referred is :

(2.) THE learned judge set out the statement of case which ran as follows : One C. R. Thiruvengadam Chetty executed a deed of trust on 30th Sept., 1954, whereby he conveyed his self-acquired properties to be administered by three trustees, the first trustee being his son, G. T. Rajamannar alias Raju. According to that deed, the present trustees were to utilise the income of the trust properties towards the maintenance of the first referred son and his grandchildren. THE marriage expenses of his grand- children, whether male or female, have to be met from the income of the properties included in the trust deed. After the said Thiruvengadam Chetty's death, his male grandchildren were to become the absolute owners sharing equally the properties mentioned in the schedule to the deed in question, subject to the maintenance and marriage expenses of the donor's female grandchildren. THE trust was to cease after the death of the said Rajamannar and on the male grandchildren completing the age of 21 years. THE question that arose was at what rate and in what status the income from the trust properties was to be taxed.

(3.) AFTER setting out the statement of case as above, HEGDE J. continued : From the facts noticed above, it is clear that the income which is subject to tax was realised from trust properties. It is equally clear that the persons mentioned in the deed of trust are the trustees. Further, during the relevant assessment year, the beneficiaries under the trust deed are indeterminate. Hence, the question is whether the trustees are liable to be taxed under the first proviso to s. 41 (1) of the "Act".