Sabyasachi Mukharji, J. - (1.) In this reference under Section 66(1) of the Indian Income-tax Act, 1922, the following question has been referred to this court: " Whether, on the facts and in the circumstances of the case, and on a correct construction of the trust deed, dated the 19th July, 1957, the Tribunal was right in holding that the maximum rate of tax could not be applied in this case under the 1st proviso to Section 41(1) of the Indian Income-tax Act, 1922 ?"
(2.) The assessee in this case are the trustees to the estate of late Tarun Kumar Roy. The assessment years involved are 1959-60, 1960-61 and 1961-62. For the first assessment year the previous year is the broken period starting from the date following the death of the creator of the trust, that is, 21st of Pous, 1365 B.S. (7-1-59) to 31st of Chaitra (13-4-59) and for the subsequent two years the previous years are the Bengali years 1366 and 1367. By a deed dated 19th of July, 1957, Tarun Kumar Roy transferred several house properties, bustees, landed properties in Calcutta and settled them on trust for the future benefit of his wife and children. It would be relevant in view of the question referred to mention the relevant clauses of the said trust deed. The settlor after appointing himself as the first trustee and making the subsequent appointment of trustees after his death provided, inter alia, as follows : " (1) The sum of Rs. 500 (rupees five hundred) per month to the settlor's said wife, Smt. Surama Sundari Roy, during her life without any abatement, deduction or diminution, for and towards the maintenance of herself and that of Smt. Sabita Rani Roy alias Lakshmi until the marriage of the said daughter PROVIDED HOWEVER that if the said Srimati Surama Sundari Roy dies before the marriage of Sabita Rani Roy, then and in that event the succeeding trustees shall pay Rs. 200 (rupees two hundred) only for and towards the maintenance, education and other expenses of the said Sabita Rani Roy alias Lakshmi until her marriage, (2) That the succeeding trustees shall hold and set apart the balance of all such net rents, issues and profits with liberty to them to invest the same or portion thereof in approved securities and/or in immovable properties including lease-hold properties and shall apply the same or portion thereof together with all monies which may become available at the time and represent accretions and accumulation of the trust estate, towards the expenses of the marriage of each of the settlor's two sons and beneficiaries, viz., the said Barun Kumar Roy and Basudev Kumar Roy. respectively, a sum of Rs. 8,000 (rupees eight thousand only) on each marriage and shall similarly apply and spend for and towards the expenses of marriage of the said Smt. Sabita Rani Roy alias Lakshmi, the minor daughter of the settlor, and also a beneficiary the sum of Rs. 15,000 (rupees fifteen thousand only), if for any reason such marriages do not or, any of them does not take place during the lifetime of the first trustee and sole beneficiary for life. (3) The succeeding trustees shall set apart for the use of and allow the said Srimati Surama Sundari Roy from and after the death of her husband, the settlor, for and during the term of her natural life, to reside with her said daughter, Smt. Sabita Rani Roy, until her marriage in the entire first floor of and in the messuage tenament, dwelling house and premises No. 43B, Bonamali Sarkar Street, Calcutta, and pay all municipal rates and taxes as also all other taxes and outgoings whatsoever in respect of the said specified portion of and in the said dwelling house and premises No. 43B, Bonamali Sarkar Street, so allotted for their residence as aforesaid and shall from time to time cause necessary repairs to be made thereto as long as the said Smt. Surama Sundari Roy and/or her said daughter, Sabita Rani Roy, alias Lakshmi, shall live and enjoy the said portion in the said house and premises. (4) That after the death of Smt. Surama Sundari Roy and after the marriage of the said Smt. Sabita Rani Roy, alias Lakshmi, the said portion of and in the premises No. 43B, Bonamali Sarkar Street, shall be held and managed by the succeeding trustees in the same manner as other properties comprised in the trust estate, and as hereinafter expressed. (5) That if at any time hereafter, during the subsistence of the trust, created by these presents, any male child or male children is or are born to the settlor by his said wife, then and in that event the succeeding trustees shall transfer and convey the properties comprised in the trust estate for the time being in their hands amongst all the sons of the settlor including the son or sons hereafter born, in equal shares at the time of the distribution hereinafter expressly mentioned and declared."
(3.) During his lifetime, however, the settlor appointed himself as the sole beneficiary. After his death on the 6th of January, 1959, the question arose how the assessment should be made on the trustees. In the trust deed referred to hereinbefore it was provided that after the demise of the settlor his wife, Smt. Surama Sundafi Roy, and his three sons, Sri Arun Kumar Roy, Sri Barun Kumar Roy and Sri Basudev Roy, would become the joint trustees in respect of the properties settled. The Income-tax Officer found that the trust deed did not provide for any definite share of the beneficiaries and, as such, he taxed the net income of the trust estate at the maximum rate under Section 23(3) read with Section 41 of the Indian Income-tax Act, 1922.;