Trust beneficiary shares remain determinate where the deed fixes equal entitlements, despite trustee discretion over yearly distribution.

A trust deed that names the beneficiaries and fixes their entitlement in equal shares does not create indeterminate or unknown interests merely because trustees may decide whether to distribute income in a particular year. The distinction is between the legal share in the trust income and the amount actually distributed in any year; discretionary non-distribution does not make the shares uncertain. Applying the settled interpretation of the analogous earlier provision, the Calcutta HC stated that the taxing rule for uncertain beneficiary interests applies only where income is not specifically receivable on behalf of any one person or where the shares themselves are uncertain. Section 164 of the Income-tax Act, 1961 was therefore not attracted.

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Issues: Whether the beneficiaries' individual shares under the trust deed were indeterminate or unknown so as to attract section 164 of the Income-tax Act, 1961, and require assessment of the trust income in the hands of the trustees at the applicable maximum rate.

Analysis: The trust deed named the beneficiaries and, on its proper construction, fixed their entitlement in equal shares whenever the trustees chose to distribute the income. The distinction between the quantum of income actually distributed in a given year and the legal share in that income was material. The mere fact that the trustees had discretion to withhold distribution in some years did not make the beneficiaries' shares indeterminate or unknown. The court applied the settled interpretation of the analogous provision in section 41 of the Indian Income-tax Act, 1922, and held that section 164 applied only where income was not specifically receivable on behalf of any one person or where the shares themselves were uncertain.

Conclusion: Section 164 of the Income-tax Act, 1961 was not attracted; the beneficiaries' shares were determinate and known, and the question was answered in favour of the assessee.

Ratio Decidendi: Where a trust deed names the beneficiaries and fixes their shares, a trustee's discretion as to whether to distribute income in a particular year does not by itself render those shares indeterminate or unknown for the purposes of the taxing provision applicable to uncertain beneficiary interests.

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