Trust property held for beneficiaries does not attract representative wealth-tax assessment unless held on their behalf.

A trustee holding trust property for the benefit of beneficiaries is not assessable to wealth-tax under section 21 unless the assets are held on their behalf within the statutory meaning. The Court treated representative assessment as co-extensive with the liability of the person for whom the assets are held, but found that "on behalf of" is materially different from "for the benefit of". As the trustee held the trust estate as legal owner for the beneficiaries and not on their behalf, section 21 was not attracted. Section 3 also did not sustain a representative assessment because the beneficiaries were not liable in the required manner.

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Issues: Whether the trustee under the trust deed dated 19 July 1949 was assessable to wealth-tax under section 21 of the Wealth-tax Act for the relevant assessment years.

Analysis: Section 21 applies where chargeable assets are held by a trustee on behalf of another person, and the assessment in such a case is representative in character and co-extensive with the liability of the person on whose behalf the assets are held. The trust property in question was held by the trustee as legal owner for the benefit of the beneficiaries, and the expression "on behalf of" was held to be materially different from "for the benefit of". On the relevant valuation dates, the trustee did not hold the trust estate on behalf of the two sons so as to attract section 21. The charging provision in section 3 also could not support a representative assessment because the beneficiaries themselves were not liable in respect of the trust corpus in the manner required by section 21.

Conclusion: The trustee was not assessable to wealth-tax under section 21 of the Wealth-tax Act. The question was answered in the negative, in favour of the assessee.

Ratio Decidendi: A trustee who holds trust property for the benefit of beneficiaries, but not on their behalf, does not fall within section 21 of the Wealth-tax Act, and representative wealth-tax assessment cannot be made unless the statutory condition of holding assets on behalf of another is satisfied.

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