Indeterminate trust income shares triggered maximum-rate taxation where beneficiaries had no fixed entitlement to the residual estate income.

Trust and estate income applied under a will to multiple family beneficiaries, married daughters, their children, and charitable or educational purposes was treated as income of indeterminate shares where no fixed proportions or quantified entitlements were allocated. The pecuniary legacies and specified payments to named beneficiaries were ascertainable, but the balance of income from the Dadar property and the residuary estate could not be claimed by any beneficiary as a specific share for the relevant year. That balance was therefore assessable at the maximum rate under the proviso to section 41(1) of the Indian Income-tax Act, 1922.

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Issues: Whether the balance of the income from the Dadar property after the payments contemplated in clause 9(e) of the will and the balance of the income from the residuary estate were assessable in the hands of the trustees and executors at the maximum rate under the first proviso to section 41(1) of the Indian Income-tax Act, 1922.

Analysis: The pecuniary legacies and the specified payments under clause 9(e) were to named beneficiaries and were therefore ascertainable. But the remaining income from the Dadar property and the residuary estate had to be applied under clause 10 to the maintenance of several family members, married daughters and their children, as well as educational and charitable expenses, without any allocation of definite proportions or fixed entitlements. For the relevant accounting year, no beneficiary could claim a specific quantified share in that balance of income. The shares were therefore not capable of being treated as determinate or known within the meaning of the first proviso to section 41(1).

Conclusion: The balance of the income from the Dadar property and the residuary estate was rightly assessable at the maximum rate under the first proviso to section 41(1) of the Indian Income-tax Act, 1922, against the assessee.

Final Conclusion: The reference was answered in favour of the Revenue, and the disputed balance of trust and estate income was held taxable at the maximum rate because the beneficiaries' shares were indeterminate for the relevant year.

Ratio Decidendi: Where trust or estate income is applied to multiple beneficiaries and purposes without fixed shares or quantified entitlements, the income is liable to maximum-rate taxation under the proviso governing indeterminate or unknown shares.

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