KOTVAL, J. - (1.) THE only question referred for our decision is : "Whether, on the facts and in the circumstances of the case, and having regard to the terms of annexure 'A ', the Tribunal was justified in holding that the interest of the assessee under the trust had no value ?"
(2.) THIS question has been framed in connection with the assessments to wealth -tax of two individuals who are brothers, Purshottam N. Amersey and Manoranjan N. Amersey, but at the hearing before the Tribunal and before us it was agreed that the facts and circumstances in the cases of both the assessees are the same and that the documents which fall to be considered in each case are also similar. Therefore, in the statement of the case reference has been made to the facts of only one case, that of the assessee, Purshottam, and we shall also for the purposes of the decision of this reference refer to the facts and circumstances of that case. Purshottam Amersey and his brother were partners along with others in M/s Amersey Damodar of Bombay. In that firm, Purshottam had to the credit of his account in the year 1949 a sum of Rs. 4,50,000 lying in deposit with the firm. On 8th Sept., 1949, he declared a trust of this amount. The amount was not made over to anyone but it appears that by a mere book entry the amount standing to the credit of Purshottam was held to the credit of the trust fund. Under the provisions of that trust, to which we shall presently advert, both the assessees were entitled to certain benefits which in the asst. yr. 1960 -61 the authorities under the WT Act sought to bring to tax in the hands of these two persons as individuals. Both these persons are otherwise, it appears, wealthy persons and own considerable property which has been taken into account towards the computation of their net wealth. So far as their beneficial interest arising out of the trust deed is concerned, having regard to the provisions of S. 21(2) of the WT Act, the interest can at the option of the Department be taxed as being the net wealth of the beneficiaries under the trust or it can be taxed in the hands of the trustees subject to the conditions prescribed in that section. The assessees have no objection to the amount of net wealth being taxed in the hands of the trustees, but the Department finds it advantageous to add it to the net wealth of the assessees as the beneficiaries under the trust fund and assess the assessees along with their other considerable wealth. That has given rise to the question which has been referred. Now, the terms of the indentures of trust dt. 8th Sept., 1949, are in both the cases identical and so we will refer to the terms of one of them. The trust deed executed by Purshottam recites that he as the settlor was appointing three persons as the trustees, the three persons being himself, his father, Nandlal, and his mother. Bai Manjulabai. The subject of the trust is the amount of Rs.
(3.) ,50,000 lying in deposit with the firm of M/s Amersey Damodar of Bombay. The first clause merely sets out that the trust is being declared out of natural love and affection which the settlor bears towards the members of his family and diverse other good causes and consideration. The second clause lays down the terms and conditions of the trust and is important for the purposes of the question referred. That clause provides as follows : "2. The trustees shall hold and stand possessed of the trust fund upon trust : (a) To recover the interest, dividends, profits and income of the trust fund and to pay out of the same the charges for collection and all other outgoings, if any; (b) To apply the balance of such interest, dividends, profits and income of the trust fund (hereinafter for brevity's sake referred to as 'the net income ') for the support, maintenance and advancement in life and otherwise for the benefit of the settlor and his wife (provided such wife is born before the date of these presents) in such manner as to enable the settlor to live as far as possible with the same comforts and to enjoy life in the same manner as he is accustomed to do And in case of any surplus income at the end of any year to accumulate the same for a period of eighteen years from the date hereof and to add the same to the corpus of the trust fund And after the expiration of the said period of eighteen years in case of any surplus income at the end of any year to hand over the same to the settlor Provided further that in applying the net income as aforesaid the trustees shall not be entitled to take into account any other income from any other source that the settlor may be receiving at the time and it is hereby expressly agreed and declared that the trustees shall not be liable or accountable to any one for any act bona fide done by them or for any payment bona fide made by them in pursuance of the provisions of this clause and in particular they shall not be accountable or responsible for the amounts expended or applied by them or the manner in which or the purpose for which the same shall be applied and all moneys so expended or applied by the trustees in their absolute discretion shall not be questioned by any party in any Court of law or otherwise howsoever; (c) If a child or children is born to the settlor, then on the death of the settlor to divide the corpus of the trust fund amongst all the children of the settlor, if more than one in the proportion of four shares for every male child to one share for every female child; (d) If no child is born to the settlor, then on the death of the settlor, leaving a wife him surviving and provided such wife is born before the date of these presents, to pay the net income to such wife until her death or remarriage whichever event shall first happen Provided further that in the event of such wife being born after the date of these presents, to pay to the wife an amount equivalent to twenty -five per cent. of the corpus of the trust fund at the time of the death of the settlor; (e) Subject to the provisions of sub -cl. (d) hereof, on the death of the settlor without a child being born to him, the trustees shall hold and stand possessed of the corpus of the trust fund upon trust to divide the same amongst the heirs of the settlor according to the law of intestate succession amongst Hindus." 4. The rest of the clauses except the two mentioned below are hardly material for the decision of the question before us. In cl. 4 it is provided that the trustees shall be at liberty to keep the trust fund as a deposit at interest in the firm of M/s Amersey Damodar -a firm in which the assessees, as we have said, were themselves partners. Next as regards the vacancy in the office of trustee, cl. 8 provides that the surviving or continuing trustee or trustees for the time being or they refusing the retiring trustees or failing them the heirs, executors and administrators of the last surviving or continuing trustee should appoint a new trustee or trustees "but so as not to be more than five nor less than two . . ." trustees upon "every or any such appointment".;