TaxTMI 
TaxTMI 
2001 (12) TMI 49
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....the above question be noted briefly as under: The Late Nawab Mir Sir Osman Alikhan Bahadur created a trust called "Supplemental Jewellery Trust" by an indenture dated February 28, 1952. The corpus of the trust fund consisted of jewellery specified in the first six schedules of the trust deed and 2,000 cumulative preference shares of Rs.100 each of Greaves Cotton and Company Limited, mentioned in the seventh schedule. In this R.C. we are concerned with the jewellery in schedules II to VI. Clause 5 of the trust deed deals with the jewellery in schedule II. Under this clause the Prince Muazzam Jah Bahadur has a right to wear and use the jewellery and ornaments specified in the second schedule on ceremonial and festive occasions. Clause 6 deals with the jewellery in schedule III. Under this clause the settlor's daughter, Shahzadi Begum Saheba, has a right to wear and use the jewellery during ceremonial or festive occasions. Clause 7 deals with the jewellery in schedule IV. Under this clause, the settlor's wife, Smt. Eqbal Begum, has a right to use the jewellery on ceremonial and festive occasions. Clause 8 deals with the jewellery in schedule V. Under this clause, the settlor's wife, G....
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....being the immediate beneficiaries, were the only persons interested in the properties and so their interest, if any, has to be assessed under section 21(1) of the Act and that the interest of the ultimate beneficiary is to be ignored. In respect of properties mentioned in schedule IV up to the assessment year 1972-73 (since Eqbal Begum died on August 4, 1972), he held that Smt. Eqbal Begum will have to be treated as the only beneficiary and her interest has to be assessed under section 21(1) of the Act. In respect of the properties given in the fifth schedule, the Commissioner of Income-tax (Appeals) held that Smt. Gouher Begum being the immediate beneficiary, the assessments up to 1977-78 (since Smt. Gouher Begum died on September 15, 1977) will have to be made on the trustees by treating her as the only beneficiary in that schedule property. After the death of the respective life tenants, the Commissioner of Income-tax (Appeals) held that the properties under each of the schedules will have to be assessed by applying the provisions of section 21(4) of the Act. He also held that there is no dispute regarding the manner of assessment of the properties given under the sixth schedule....
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....dependent schedule under the trust deed and six separate assessments ought to have been made and that the aggregation in one assessment was not justified. The Revenue contended that the aggregation in one assessment under section 21(4) of the Act was justified. The learned Tribunal in paragraph 4 of its order held that even if there were separate trusts during the life time of the beneficiaries, viz., Smt. Eqbal Begum, Smt. Gouher Begum and Smt. Mehrunnisa Begum, after their death the properties in schedules IV, V and VI reverted back to schedule I and, therefore, they were merged with schedule I properties, and as such all those properties had to be aggregated and a single assessment had to be made under section 21(4) of the Act. The Tribunal, therefore, upheld the validity of the orders of the Commissioner of Income-tax (Appeals). Sri P. Murli Krishna, learned counsel appearing for the assessee, would contend that the authorities under the Act and the learned Tribunal are not justified in aggregating the value of the jewellery specified in the schedules and making one assessment under section 21(4) of the Act. Learned counsel would contend that each schedule is an independent ....
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....oing provisions of this section, where the shares of the persons on whose behalf or for whose benefit any such assets are held are indeterminate or unknown, the wealth-tax shall be levied upon and recovered from the court of wards, administrator-general, official trustee, receiver, manager, or other person aforesaid, as the case may be, in the like manner and to same extent as it would be levied upon and recoverable from an individual who is a citizen of India and resident in India for the purposes of this Act, and (a) at the rates specified in Part I of Schedule I; or (b) at the rate of three per cent; whichever course would be more beneficial to the revenue: Provided that in a case where- (i) such assets are held under a trust declared by any person by will and such trust is the only trust so declared by him; or (ia) none of the beneficiaries has net wealth exceeding the amount not chargeable to wealth-tax in the case of an individual who is a citizen of India and resident in India for the purposes of this Act or is a beneficiary under any other trust; of (ii) such assets are held under a trust created before the first day of March, 1970, by a non-testamentar....
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....he trustee would be the same as that payable by each beneficiary in respect of his beneficial interest, if he were assessed directly. To a case where property is held on trust for giving income for life to A and on his death, to such of the children of A as the trustee might think fit, section 21(4) would be clearly attracted so far as the reversionary interest is concerned, because on the relevant valuation date, the remaindermen and their shares would be indeterminate and unknown. Even, if the beneficiaries themselves were indeterminate or unknown, sub-section (4) of section 21 would apply and the assessees would be liable to be assessed in respect of the totality of the beneficial interest in the remainder as if it belonged to one single beneficiary. When the beneficiaries are indeterminate or unknown, obviously their shares would also be indeterminate and unknown. The question in regard to the applicability of sub-section (1) or (4) of section 21 has to be determined with reference to the relevant valuation date. The Wealth-tax Officer has to determine who are the beneficiaries in respect of the remainder on the relevant valuation date and whether their shares are indeterminate....