Trust income cannot be taxed twice, but once trust property vests in the beneficiary, assessment follows real ownership.

Where trust income or wealth had already been assessed in the hands of the trustee, the same amounts were not to be assessed again in the sole beneficiary's hands for the same assessment years, because the statutory scheme treated assessment of trustee or beneficiary as alternative methods of collection. For the later years, once the trust deed terminated on the beneficiary attaining majority and the property vested absolutely in him, tax liability followed the real ownership of the property. The absence of an earlier formal transfer by the trustees did not prevent inclusion in the beneficiary's assessment after the trust ended.

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Issues: (i) Whether the income and wealth of the trust property could be included again in the assessee's hands for the assessment years 1969-70 to 1973-74 after the trust had already been assessed; (ii) Whether, for the assessment years 1974-75 and 1975-76, the property and its income were liable to be included in the assessee's hands after the trust came to an end on the assessee attaining the age of 21 years.

Issue (i): Whether the income and wealth of the trust property could be included again in the assessee's hands for the assessment years 1969-70 to 1973-74 after the trust had already been assessed.

Analysis: The statutory scheme permitting assessment either in the hands of the trustee or in the hands of the beneficiary was treated as an alternative method of collection, and once the department had proceeded against the trust with knowledge of the relevant facts, the same income or wealth was not to be brought to tax again in the hands of the sole beneficiary for the same years. The Board's circulars were also relied upon as reflecting the principle that the department should not make duplicative assessments of the same trust income or wealth for the same assessment year.

Conclusion: The issue was answered in favour of the assessee for the assessment years 1969-70 to 1973-74, and the departmental appeals for those years failed.

Issue (ii): Whether, for the assessment years 1974-75 and 1975-76, the property and its income were liable to be included in the assessee's hands after the trust came to an end on the assessee attaining the age of 21 years.

Analysis: On the terms of the trust deed, the trust ceased on the assessee attaining majority and the property then vested absolutely in him. The liability to wealth-tax and income-tax followed the real ownership and vesting of the property, and the absence of an earlier formal transfer by the trustees did not prevent inclusion in the assessee's hands once the trust had terminated. The authorities concerning assessability of the real owner and the power to determine ownership beyond the registered name supported inclusion for the later years.

Conclusion: The issue was decided against the assessee for the assessment years 1974-75 and 1975-76, and the assessee's appeals for those years failed.

Final Conclusion: The dispute was resolved by excluding the trust property from the assessee's assessments for the earlier years up to 1973-74, but by bringing it into his hands for the later years after the trust had terminated and the property had vested in him.

Ratio Decidendi: Where the department has already exercised the alternative method of assessing trust income or wealth for a period, the same income or wealth is not to be taxed again in the beneficiary's hands for that period; but once the trust terminates and the property vests in the beneficiary, assessment follows the real ownership notwithstanding the absence of a formal transfer.

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