- (1.) The Income-tax Appellate Tribunal has referred the following question of law under Section 27(1) of the Wealth-tax Act, 1957, for the assessment year 1975-76, which arises out of the order of the Tribunal dated June 28, 1986 : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the shares of Smt. Jinia Bai and after her death the shares of other beneficiaries in the trust income are determinate and known and the provisions of Section 21(4) of the Wealth-tax Act, 1957, do not apply -
(2.) The only question in dispute is as to whether the assessment should have been passed under Section 21(1) of the Wealth-tax Act, 1957, and not under Section 21(4) of the Act while determining the interest of the trustee (sic). According to the assessee, the shares of the beneficiaries were determinate and, as such, the provisions of Section 21(1) should have been applied. According to the Revenue, Shri Pusalal Mansinghka, S/o. Seth Mahadeoji Mansinghka, executed a trust deed dated June 29, 1949, creating the asses see-trust and appointed four trustees to execute the same. The trustdeed was registered to which certain properties were transferred. Three-fourths of the net income of the trust, after meeting the expenses including income-tax, were payable to Smt. Jinia Bai, wife of the settlor. It was also provided that further payment to the said lady during any year to the extent of the balance one-fourth of the said net income and also 25 per cent. of the corpus of the trust could be made if the said amount of three-fourths of the net income in any year is not sufficient. Similarly, if the said amount of three-fourths of the net income in any year is more than what is necessary to her needs, the payment could be reduced up to one-fourth of the said net incohie. The decision of the trustee in this regard was considered final. After the death of the lady Smt. Jinia Bai, the trustees hold the trust property for the benefit of son or sons of the settlor, and, in case there is no sqn or sons surviving, the benefit was to pass on to the widow or widows of such son or sons and thereafter to the benefit of the grandsons. If there was no male successor or descendant of the settlor according to Hindu law, the trustees could exercise the power to spend the income for any charitable purposes. In these circumstances, it was contended that the benefit derived by the lady beneficiary was indeterminate and the shares of the persons having a reversionary interest in the trust properties were also said to be indeterminate.
(3.) In CWT v. Trustees of H. E. H. Nizam's Family (Remainder Wealth) Trust [19771 108 ITR 555, it was held by the apex court that the provisions of Section 21(1) will apply only where the trust property is held by the trust on behalf of a single beneficiary or where there are more than one beneficiaries, then the individual shares of the beneficiaries in the trust property are determinate and known. If the shares are indeterminate or unknown, the provisions of Section 21(4) will apply.;