R.K.AGRAWAL,J. - (1.) AT the instance of the assessees who are four in number, the Tribunal, Allahabad, by a consolidated order dt. 24th March, 1982, has referred the following two common questions of law under Section 27(1) of the WT Act, 1957 (hereinafter referred to as 'the Act'), for opinion to this Court : '1. Whether, on the facts and in the circumstances of the case and on a true interpretation of the trust deeds, the Tribunal was justified in law in concluding that the interest of each of the beneficiaries under these trusts on each of the valuation dates, was indeterminate and the beneficiaries were unknown and accordingly in holding that the assessments of the beneficial interests in the trust properties of the beneficiaries could be made on the trustees only under Section 21(4) of the WT Act, 1957 ?
(2.) WHETHER , on the facts and in the circumstances of the case and on a true interpretation of the provisions of Section 25(2) of the WT Act, 1957, the CWT had validly assumed jurisdiction and was justified in law in holding that the assessment made by the WTO under Section 21(1) of the WT Act, 1957, were erroneous ?' It may be mentioned here that in respect of the wife of Rakesh Mohan Private Trust, the assessment years involved are 1974 -75 to 1976 -77 whereas in respect of the other three assessees, the assessment years involved are 1973 -74 to 1977 -78. 2. Briefly stated, the facts giving rise to the present reference are as follows : Each of the assessees is a private trust. The following is the table of relationships : Padmshri N.N. Mohan (deceased)|| | | Padmbhushan Lt. Col. Sukhdeo Lt. Col. KapilV.R. Mohan (Died) Mohan Mohan| | -| | | |Rakesh Mohan Pankaj Mohan Vinay Mohan Hemant Mohan Lt. Col Kapil Mohan executed a deed dt. 20th Oct., 1973, in respect of 60,000 equity shares of Mohan Meakins Breweries Ltd. for the benefit of the wife of Rakesh Mohan. Under Clause 2 of the said trust deed, in the event of her death or her otherwise becoming incapable of acquiring any interest in the property, the beneficiary was to be the second wife of Rakesh Mohan (in case he married again) and in case his wife (first) became incapable of acquiring property, then the first son of Shri Rakesh Mohan, on his attaining majority. In Clause 3 it was further provided that if the said Shri Rakesh Mohan did not marry and/or in any manner all possibilities of his marriage disappeared, the beneficiary of the trust was to be Shri Pankaj Mohan (upon his attaining majority) and failing him, to the other surviving heirs of Shri Pankaj Mohan. In Clause 4 it was provided that the trustee shall hold the trust property absolutely in trust for and for the benefit of the beneficiary named hereinbefore and administer the same in the manner provided therein. In Clause 6 of the deed it was provided that the trust shall come to an end upon the transfer and delivery of the trust property and all the accumulation thereto to the beneficiary in the manner indicated therein whereupon the trustee shall stand discharged, otherwise the trust shall remain in full force. Three similar trusts were earlier created on 22nd May, 1973, in respect of 60,000 equity shares of Mohan Meakins Breweries Ltd.(i) by Rakesh Mohan for the benefit of the first son of Shri Pankaj Mohan (in any circumstance), (ii) by Smt. Comilla Mohan for the benefit of the first son of Shri Hemant Mohan, and (iii) by Lt. Col. Kapil Mohan for the benefit of the first son of Rakesh Mohan, In these trusts, it was provided that in case the son named therein died before attaining the age of majority or otherwise became incapable of acquiring any interest in property, the beneficiary will be the next surviving male child. They also provided that if Shri Pankaj Mohan, Hemant Mohan or Rakesh Mohan (as the case may be) did not beget a son and in any manner all possibilities of begetting a son disappeared and/or the male children having been born, died before attaining majority, the beneficiary would be Shri Pankaj Mohan, Hemant Mohan or Rakesh Mohan himself (as the case may be). Accordingly, the trustees named in each case, for the valuation dates as on 31st March, 1973 to 31st March, 1977, filed the return of wealth declaring the value of shares and accretions in regard thereto in the assessment years subsequent to 1973 -74. The WTO completed the assessments of these assessees in the status of individuals by invoking the provisions of Section 21(1)/21(2) of the Act on the basis that on each of the valuation dates the beneficiaries were known and that their shares were determinate. Subsequent to the making of these assessments and in view of the objection raised in the audit note, the WTO sought to rectify the assessments by issuing notices dt. 27th Aug., 1979, under Section 35 of the Act on the ground that the status of the assessees had been wrongly adopted. However, the WTO dropped the reassessment proceedings after considering the replies of the assessees.
(3.) THEREAFTER , the CWT, acting under Section 25(2) of the Act, issued notices to the assessees on 13th Dec., 1979, to the effect that the assessments made by the WTO under Section 16(3) were erroneous insofar as they were prejudicial to the interest of the Revenue inasmuch as the WTO had assessed the assessees in the status of the individuals on the ground that the shares of the sole beneficiaries were determinate and had allowed exemptions under Section 5(1A). After considering the replies dt. 20th Oct., 1979, filed by each of the assessees, the CWT held that the beneficiaries for whom the assets were held by the trustees, were indeterminate and unknown and that the assessees should have been assessed to tax under Section 21(4) of the Act. The exemption under Section 5(1A) was also held to be inadmissible and, therefore, the tax was held to be leviable at the higher rate of 1.5 per cent. He held that on the relevant valuation date Shri Rakesh Mohan had not married, Sarvshri Pankaj Mohan and Hemant Mohan were themselves minors, and that Shri Rakesh Mohan had no son as he was married only in April, 1977.;