PADMAVATI JAYKRISHNA TRUST Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) ONE Mahalaxmibai, the widow of Harivallabhdas Kalidas, executed two deeds of trust dt. 30th Dec., 1945, and 14th Sept., 1946, and thereunder settled certain amounts, shares and securities upon certain trusts the income from which was payable for life to the wives of two of her sons, Jaykrishna Harivallabhdas and Ramkrishna Harivallabhdas. Both Jaykrishna and Ramkrishna have two sons each by their wives, Padmavati and Virmati, respectively. The two trusts were assessed to wealth tax under the WT Act, 1957, and the assessment year under reference common to both is 1958 59 and the relevant valuation date relating to both is 31st Dec., 1957.

(2.) THE reference arises from two orders passed by the Tribunal in two appeals filed by the two assessee trusts. Though the assessees in the appeals were different and two separate orders were passed, a common consolidated statement of the case has been made at the instance of the two assessee trusts as the question arising in both the cases was a common and identical question and the provisions of both the trusts also are identical except for the difference in the beneficiaries. The question in both the cases being the same and the provisions of the two trusts also being identical, the answer which we may give to the question referred to us will apply to both the trusts and therefore it will be sufficient if we recite the relevant clauses from the deed of trust dt. 30th Dec., 1945, only.

(3.) THE WTO first worked out the wealth of the trust under the trust deed dt. 30th Dec., 1945, at Rs. 38,68,074 and after computing the life interest therein of the said Padmavati, the wife of Jaykrishna, at Rs. 5,10,466 and deducting the same from the said amount of Rs. 38,68,074 brought to tax the balance under the Act. This was done as the life interest of the said Padmavati was brought to tax in her personal assessment. The same thing was done in the case of the other daughter in law, the said Virmati. In the course of those assessment proceedings a question common to both the trusts arose as to whether assessment should be made under Sub S. (I) or sub s. (4) of S. 21. In the view that the WTO took that the beneficiaries in the remainder after payment of the life interest and their shares were indeterminate, he applied S. 21(4) rejecting the contention urged by both the trusts that it would be Sub S. (I) of S. 21 which would apply. In appeal, the AAC, following the decision of the Tribunal in the assessment of the two trusts for the previous asst. year 1957 58, upheld the view of the WTO. A reference was made to this Court against the assessment for the earlier year 1957 58 but that reference was not pressed and was withdrawn with the result that the question remained open. In the appeals before the Tribunal against the orders of the AAC, the assessee trusts once again pressed their contention that sub s. (I) and not Sub S. (4) of S. 21 would apply. But the Tribunal, following its previous order relating to the asst. year 1957 58, rejected the appeals upholding the view of the WTO and the AAC that the trust being for the benefit and in favour of the male child or children of the said Jaykrishna, the shares coming to them on the happening of the event set out in the trust deed, i.e., the death of the said Padmavati, would be indeterminate and therefore it would be Sub S. (4) of S. 21 which would apply. In arriving at this conclusion the Tribunal appears to have been guided by certain observations made by Mody J. of the High Court of Maharashtra while deciding an Originating Summons, being O.S. No. 75 of 1960, filed for the purposes of obtaining certain directions in regard to an arrangement entered into between the said Jaykrishna and other trustees on the one hand and the said Padmavati. These observations were made by the learned judge in construing the provisions of cls. (a) and (b) of the trust deed and were as follows :