Bachawat, J. - (1.) REFERENCE No. 45 of 1954 relates to the assessment year 1945 -46. REFERENCE No. 106 of 1954 relates to the assessment years 1947 -48 and 1948 -49. Both references arise out of the assessments of one Birendra Kumar Datta in respect of income from house properties under Section 9 of the Indian Income -tax Act.
(2.) BY a Trust Deed dated 5 -2 -1944, Birendra conveyed to himself and his mother Sudhamukhi as Trustees the house and premises Nos. 8/3 and 8/10 Alipore Park Road and 37 Syed Ameer Ali Avenue within the municipal limits of the town of Calcutta. The several beneficiaries mentioned in the Trust Deed are Birendra and his brothers Suprovat Jyotsna and Indrajit, his mother Sudhamukhi and his father Kiran Chandra Datta. Clause 1 of the Trust Deed is as follows; "The Trustees shall realise the rents of the said Trust Properties and pay the rates, taxes and other impositions in respect thereof and the balance after such payments shall be received by the said Birendra Kumar Datta for the benefit and expenses in the manner following, that is to say, one -third thereof for the said Srimati Sudhamukhi Datta in her personal capacity and one -sixth each for himself, Suprovat Kumar Datta, Jyotsna Kumar Datta and Indrajit Kumar Datta. The said Srimati Sudhamukhi Dutta shall receive her said share from the said Birendra Kumar Dutta. In the event of her death her husband Kiran Chandra Datta shall receive the said share. The latter three however shall receive their said shares as soon as they attain majority respectively. In the event, however, God forbid, of the death of any of the said male beneficiaries the widow and/or the child or children, if any, shall receive such sums of money out of his said one -sixth share as the Trustee Srimati Sudhamukhi Datta or her husband Kiran Chandra Datta shall decide." Clause 2 of the deed provides that on the death of both the parents, the Trustees are to convey to Suprovat and Jyotsna each an undivided half share in premises No. 8/3, Alipore Park Road and to Birendra and Indrajit each an undivided half share in premises No. 8/10, Alipore Park Road. Clause 2 also provides that the widow of any of the brothers shall have no interest in any of the properties except the right to receive one -third of the net income arising out of the property allocated to her husband. Clause 3 provides that on the expiry of six years from the date of the Deed the trustees are to convey premises No. 37, Syed Ameer Ali Avenue to the mother and if she be dead to the father and if both be dead to Birendra and his three brothers in equal shares. Clause 4 empowers the trustees to sell the trust properties with the consent of the father Kiran Chandra Datta and to re -invest the sale proceeds in immovable properties. Clause 5 empowers the father Kiran Chandra Datta to nominate a trustee in place of a dead trustee. In his return for the assessment years 1945 -46, 1946 -47, 1947 -48 and 1948 -49, the assessee Birendra contended that he should be assessed Only in respect of one -sixth of the income from the three house properties. The Income -Tux Officer rejected this contention. He held that the trust deed is invalid, that in the circumstances the assessee Birendra remained the full owner of the properties and that the whole income of the properties should be assessed in his hands. He passed separate orders of assessment for the several years on that basis. The orders of assessment of the Income -Tax Officer in all the four assessment years were confirmed on appeal by the Appellate Assistant Commissioner. From these appellate orders there were four appeals before the Appellate Tribunal. In all the four appeals the Appellate Tribunal held that the Trust deed is valid. In the appeal relating to the assessment year 1946 -47 the Appellate Tribunal by its order dated the 22nd January, 1953 held that one -sixth of the income which had been retained by the assessee himself should be assessed in his hands and directed that the balance five -sixth of the income should be assessed in the hands of the trustees. The assessment for the assessment year 1946 -47 is not the subject matter of the two references before us. Neither the Commissioner nor the assessee asked for any reference with regard to that assessment and the order of the Appellate Tribunal relating thereto has now become final. The appeals relating to the assessment years 1945 -46, 1947 -48 and 1948 -49 were disposed of by the Appellate Tribunal by two separate orders dated the 28th September, 1953. In those three appeals the Appellate Tribunal held that the conclusion that the trust deed is valid does not assist the assessee and that the single assessment of the whole income on him is correct whether the as essment be upon him in his personal capacity or as a trustee. The reasoning of the Appellate Tribunal appears to be as follows: An assessment under Section 9 has to be made on the owner of the house property, and not on the person entitled to the income therefrom. The provisions of Clauses 2 and 3 of the trust deed are not yet operative since both parents have not died and. six years from the date of the deed have not expired. Until those provisions come into play the ownership of the properties is not disposed of, the beneficiaries have no sort of ownership, the beneficial ownership is vested in the settlor and that though the beneficiaries have shares in the income and are not hit by the proviso so far as it concerns such shares and they are not owners of the properties for purposes of Section 9(3) and as such cannot bring themselves under the substantive provision of Section 41.
(3.) IN this view of true matter the Appellate Tribunal by two separate orders dismissed the three appeals relating to the assessment years 1945 -46, 1947 -48 and 1948 -49. On the application of the assessee the Tribunal has made two references under Section 66(1) of the INdian INcome Tax Act of the following question of law arising out of those two orders: "Whether on the facts and in the circumstances of this case and on a true construction of the Deed of Trust dated 5 -2 -1944, the assessment for 1945 -46 was rightly made in a single sum upon the assessee in respect of the income from the house properties comprised in the said Deed." It may be noticed that the assessee had not made any returns of income as a trustee and that the other trustee Sudhamukhi had not joined in the returns submitted by the assessee. Strictly the point in dispute before the Appellate Tribunal was whether Birendra on his own account and not as trustee was in receipt of the whole of the income of the trust properties or of only a part thereof and whether the whole or only a part of the income should be assessed in the hands of Birendra in his personal capacity. The Tribunal held that Clauses 3 and 4 of the trust deed having not come into play during the relevant period there was no disposition of the ownership of the properties by the bust deed and that the beneficial ownership therein during that period was vested in the settlor Birendra and that the whole of the income under Section 9 should be assessed in the hands of Birendra as the owner of the properties on that basis. So far no question of the applicability of Section 41 could arise because the trustees were not before the Tribunal and Birendra was not being assessed as a trustee. But the Tribunal apparently without any objection from the assessee proceeded to discuss the question whether the assassment could be made upon the assessee in his capacity as trustee and whether the substantive part of Section 41(1) was applicable and to hold that the single assessment on the assessee whether in his personal capacity or as a trustee was correct.;