Law:

Section:

Section 21 of the wealth-tax act, 1957-Trustees-Assessment of-Settlor created a trust of his properties for benefit and use of his two existing sons and other sons who might be born thereafter till eldest attained majority-Three more sons born till eldest attained majority-Whether shares of beneficiaries indeterminate or unknown and assessment should be made on trustees as "individual"-Held, on facts, no, shares were determinate and tax was to be levied on trustees to the same extent as beneficiaries would have been liable Facts Shri V. Rangiah Chetty executed a trust deed on 15-08-1931 in respect of some of his properties for the benefit and use of his two sons, Radha Krishna and Gopal Krishna, and also all other sons that might be born to him thereafter till the eldest son completed 21 years. The official trustee of Madras was appointed as the trustee. Later three more sons were born to the settlor, namely, Mohan Krishna, Murali Krishna and Ananda Krishna. After the eldest Radha Krishna attained 21 years of age, the five sons filed an application before the High Court to obtain possession of the trust properties and to become trustees in place of the official trustee of Madras. The High Court held that not only the five sons but all the sons that might be born to V. Rangiah Chetty, would be the beneficiaries under the trust and appointed the three major sons as the trustees. For the assessment years 1958-59 and 1960-61 to 1967-68, the WTO rejected the assessee's contention that the beneficiaries should be assessed separately in respect of their respective shares under section 21(1) and, instead, assessed the trustees in the status of individual under section 21(4) on the ground that the shares were indeterminate. The AAC confirmed the WTO's order. The Tribunal, however, held that the trustees should have been assessed under section 21(1) and not under section 21(4) and set aside the assessments to be made de novo. On reference: Held 1. The five sons of the author of the trust became entitled to the estate as beneficiaries and, in the absence of their shares being specified and without any contrary indication, each of them took equally, i.e., each beneficiary…

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