DIVAN, J. - (1.) SINCE all these matters are interconnected and the questions arising in each of these matters are identical, we will dispose of these four references by this common judgment. These four references are pertaining to three trusts created by one Mahalaxmi Harivallabhdas Kalidas on the occasion of the marriage of each of her three sons. Her three sons were Jaykrishna, Balkrishna and Ramkrishna. Trust deeds in identical terms with difference only as regards the names of the individuals concerned and with the same scheme were executed settling certain properties for the benefit of the daughter -in -law who was getting married on that particular occasion and for the benefit of the male children of the son who was getting married. The questions which are referred to us in these four references relate to different assessment years, namely assessment years 1961 -62 to 1964 -65, in the case of Arundhati Balkrishna Trust, and also to assessment years 1959 -60 and 1960 -61. Reference No. 3 of 1973 is in respect of Arundhati Balkrishna Trust for the assessment years 1959 -60 and 1960 -61 and Wealth -tax Reference No. 5 of 1973, in respect of the same trust but for the four subsequent assessment years, assessment year 1961 -62 to 1964 and 1964 -65, and is in connection with Virmati Ramkrishna Trust, Ahmedabad. Wealth -tax Reference No. 6 of 1973 is in respect of the trust created for the third daughter -in -law of Mahalaxmi, namely, Padmavati Jaykrishna, and is for the assessment year 1963 -64. As we have stated earlier, all these references raise identical questions and it would be convenient only to refer to the facts of only one out of these four references and for the sake of convenience, we will deal with the facts arising in Wealth -tax Reference No. 3 of 1973.
(2.) IN this reference the assessment years are 1959 -60 and 1960 -61 and the trust deed was executed by Mrs. Mahalaxmi Harivallabhdas Kalidas on December 30,1945. By this trust deed an amount of Rs. 3,28,831 and shares and securities of the market value as on that date of Rs. 11,81,670 were settled upon trust for the benefit of Arundhati Balkrishna, daughter -in -law, who is the life -tenant under that trust deed. Under the terms of the said trust. Smt. Arundhati Balkrishna, the daughter -in -law, was entitled to the entire income of the trust during her lifetime and on her death the assets of the trust were required to be divided amongst the male children of Balkrishna Harivallabhdas Kalidas, husband of Arundhati Balkrishna and son of the settler. For the assessment year 1959 -60, the total wealth of the trust was determined at Rs. 33,57,595 and for the assessment year 1960 -61, the wealth of the trust was determined at Rs. 39,66,095. The capitalised value of the interest of the life -tenant Arundhati, was determined at Rs. 4,54,363 for the assessment year 1959 -60 and at Rs. 3,52,593 for the assessment year 1960 -61. In the individual wealth -tax assessment of Arundhati herself, the life -tenant, these amounts of the capitalised value of her interest as a life -tenant were assessed and, therefore, while assessing the trustees of the trust in their representative capacity under section 21, the balance of the amounts, namely, Rs. 29,01,332 for the assessment year 1959 -60 and Rs. 36,13,502 for the assessment year 1960 -61, were sought to be assessed in the hands of the trustees. The Wealth -tax Officer assessed the total wealth in the hands of the trustees at Rs. 29 lakhs and odd and Rs. 36 lakhs and odd for the two assessment years respectively. Against the order of the Wealth -tax Officer, the trustees went in appeal to the Appellate Assistant Commissioner and at that stage on behalf of the trustees it was contended that the whole of the balance of the value of the assets pot the trust should not be assessed in the hands of the trustees but only the present value of the interest of the beneficiaries namely, the remainder man, should be assessed in the hands of the trustees. The matter was then carried in further appeal before the Appellate Tribunal and against it was urged on behalf on the trustees that the present value of the interest of the remainder man should alone be brought to tax. It was contended on behalf of the assesses that the provision of law which applied to this case was section 21(1) of the Wealth -tax Act and not section 21(4) of the Wealth -tax Act and it was contended that in the light of the decision of this High Court in Padamavati Jaykrishna Trust v. Commissioner of Wealth -tax where one of the assesses in the present group of references was before the court, this High Court had held that the case of Padmavati Jaykrishna Trust, the assessee in Wealth -tax Reference No. 6 of 1973, fell under section 21(1) and not section 21(4) of the Act. It was contended that since dual assessment, wealth -tax could not be taxed again in the hands of the trustees. The Tribunal held that the trust could be assessed only to the extent of the value of the interest of the reversioners as arrived at by the values. The Tribunal had appointed two valuers as contemplated by the provisions of section 24(6) of the Wealth -tax Act as it stood till 1972, and in the light of the report of the valuers, the Tribunal directed that the trust could be assessed only to the extent of the present value of the interest of the reversioners or remainder man as arrived at by the valuers. The Tribunal held that in the case of this particular trust, apart from the life -tenant, namely, Arundhati Balkrishna, and the remainder man or reversioner, namely, her male child or children, there was no third group of beneficiaries and though the total of the value of the interest of the life -tenant and the remainder man as determined by the valuers might not total up to the present normally value of the wealth of the trust, the trust property itself was subject to certain restrictions and hindrances which would reduce the real value of the wealth of the trust. The Tribunal also held that even presuming without admitting that the real total wealth of the trust was more than the combined interests of the beneficiaries, the assessment had got to be limited to the interests of the beneficiaries and the Tribunal held that the difference between the nominal value of the trust and the totals of the value of the interest of the two beneficiaries as determined by the valuers, could not be brought to tax in the assessment of the trust. Thereafter, at the instance of revenue, the following fives questions have been referred to us for our opinion : '(1) Whether, on the facts and in the circumstance of the case, the Tribunal was right in holding that the assessment should be under section 21(1) and not under section 21(4) of the Wealth -tax Act, 1957 ? (2) Whether, on the facts and in the circumstances of the case, the trustees are liable to be taxed on the total wealth of the trust minus the interest therein of Smt. Arundhati Balkrishna, the same having been taxed in her hands ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that even presuming without admitting that the real total wealth of the trust is more than the combined interest of the beneficiaries, the assessment has got to be limited to the interest of the beneficiaries under sub -section (1) of section 21 of the Act ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the trust should be assessed only to the extent of the value of the interest of the reversioners arrived at by the valuers ? (5) Whether, on the facts and in the circumstances of the case, the interest of life -tenant and the remainder man having been taxed separately in the hands of the life -tenant and the trust respectively and by so doing the total of the value of the two interests having fallen short of the net wealth of the trust, the balance is liable to be taxed to wealth -tax in the hands of the trust under section 21(4) of the Wealth -tax Act, 1957 ?' Before proceeding to discuss the law points involved in this case, it is better to refer to the precise terms of the trust deed in so far as it is material for the purposes of this case. The trust deed directs that the trustees shall stand possessed of the different assets of the trust upon the trusts following, that is to say : '(a) In Trust to pay the income thereof unto Arundhati, wife of Balkrishna Harivallabhdas, during her lifetime for her sole and separate use; (b) After the death of the said Arundhati, wife of Balkrishna Harivallabhdas, in trust for the male child or children of the said Balkrishna Harivallabhdas for their own use and benefit absolutely in equal shares to the intent and effect that the share of each such male child so that the representative of the male child dying before the said Arundhati, wife of Balkrishna Harivallabhdas, shall take the share which such male child would have taken had he been alive to be divided, paid and transferred to them when and as soon as the youngest of the said male children attains the age of majority.'
(3.) CLAUSE (c) provides for a situation where there are no male child or children of Balkrishna Harivallabhdas and by clause (c) power of appointment is given to Balkrishna Harivallabhdas to appoint such person or persons as he might by his will or codicil appoint, and in default of such appointment for any reason whatsoever, the corpus shall be held in trust for Balkrishna Harivallabhdas, his heirs, executors, administrators and assigns.;