TaxTMI 
TaxTMI 
1988 (6) TMI 28
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....ove three are called "the jewellery, the shares and the residence funds", respectively). In this reference, we are concerned with the share fund only. The trust is called "Sahebzadi Anwar Begum's Trust". Clause 5(a) of the trust deed declares that until the death of Sahebzadi Anwar Begum, wife of Prince Muazzam Jah Bahadur (son of the Nizam), or until she was divorced from Prince Muazzam Jah Bahadur or until her remarriage, whichever event takes place first, the said Anwar Begum shall be paid a sum of Rs. 1,500 per month out of the income of the share fund and the balance of the income was to be accumulated. However, the trustees are vested with the absolute discretion to pay or spend out of the said accumulations for any unforeseen emergency or other necessary expenses of the said Anwar Begum. Sub-clauses (b) and (c) of clause 5 indicate the line of succession of the rights of the beneficiary in the event of death, divorce or remarriage of the said Anwar Begum. For the assessment years 1977-78 and 1978-79, the trustees as "representative assessees" were assessed to tax by the Income-tax Officer on the entire income from the share fund under section 160(1)(iv) of the Income tax Act....
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.... she is alive, not divorced or shall not remarry. Therefore, it is clear that she has interest in the entire shares fund and not only to a proportion of it, which fetches an income of Rs. 18,000 per year." As seen, the question therein was the extent of share fund in which the beneficiary had interest for being charged to wealth-tax. The orientation thus was from a different angle. Further, it was under a different law, viz., the Wealth-tax Act. The observations were made in the context of finding out whether it is under section 21(1) or 21(4) of the Wealth-tax Act that the assessee was to be charged. Apart from all this, it was ultimately held by this court in that decision (p. 819): ".... when annuity to be paid is Rs. 18,000 per year for her life, the actuarial valuation of the life interest has to be calculated on that basis and not in proportion to her interest in the income from the shares fund." Thus, though it was observed that the beneficiary was having an interest in the entire share fund, the whole fund was not charged to wealth-tax. We, therefore, do not find much substance in this argument advanced by pressing into service the observations noted above, Lear....
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.... so that person standing in the same degree of relationship shall take between themselves in the proportion mentioned above their respective parent's share and so on from generation to generation. (ii) On the failure of any child or children or other remote issue of the said Sahebzadi Anwar Begum by the said Prince Muazzam Jah Bahadur to pay the net income of the shares fund to the said Prince Muazzam Jah Bahadur for and during the term of his natural life. (iii) On and after the death of the said Prince Muazzam Jah Bahadur to pay the net income of the shares fund to the settlor's eldest son, Prince Azam Jah Bahadur, for and during the term of his natural life. (iv) On and after the death of the said Prince Azam Jah Bahadur to pay and divide the net income of the shares fund amongst the children and other remote issue of the said Prince Azam Jah Bahadur by his wife, Princess Durre-Shehavar, per stirpes from generation to generation in the proportion of two shares for every male to one share for every female standing in the same degree of relationship and so that no person shall take a share in the net income of the shares fund as long as his or her parent entitled to a sha....
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....nsel for the Revenue that even a plain reading of section 160(1)(iv) reveals that the trustees are liable to be assessed for the actual amounts received by the beneficiary and since it is not disputed that the beneficiary, apart from Rs. 18,000 per year, received certain amounts for unforeseen emergency or other necessary expenses, such amounts including the specified amount of Rs. 18,000 per year should be rendered liable to be assessed to tax. We find sufficient substance in this argument of learned counsel. As rightly submitted, section 160(1)(iv) contemplates the income received or entitled to be received on behalf or for the benefit of the beneficiary. The amount received, apart from Rs. 18,000 per year, by the beneficiary is also, therefore, exigible to tax. Mr. Ratnakar, learned counsel for the assessee, contended that the amount over and above Rs. 18,000 per year is at the discretion of the trustees they may grant or refuse the request for additional amount and, therefore, even if some amount is granted, such a sum cannot be added to the specified amount of Rs. 18,000 for being assessed to tax. We may straightaway observe that no doubt it is a matter of absolute discreti....