Law:

Section:

Section 21 of the Wealth-tax Act, 1957 - Trust/Trustees - Assessment when assets are held by - Assessment years 1957-58 to 1972-73 - In accordance with terms of a trust deed, beneficiaries thereunder were to be paid specific amounts per month during their life-time out of income of corpus - Deed also made provisions for remainder of trust - Whether merely because benefit receivable by beneficiary was in shape of a monthly income and settlor had directed that if income was inadequate to make such monthly payments that shortfall was to be drawn from corpus, it could not be said that it was not possible to evaluate its capitalised value - Held, yes - Whether since beneficiaries were entitled to payment of definite or known amount and had life interest, assessment was to be made under section 21(1) in respect of actuarial valuation of monthly sums paid to each of beneficiaries - Held, yes - Whether, however, separate assessment was to be made under section 21(4) in respect of actuarial valuation of totality of beneficial interests of remainder men or reversioners - Held, yes FACTS In terms of a trust deed executed by the Nizam, some of the beneficiaries were to be paid specific amounts per month during their life-time while some others were entitled to specific monthly amounts on fulfilment of conditions prescribed in the deed. Provisions were also made regarding the remainder of the trust. The deed also provided that if the income was inadequate to make the monthly payments to the beneficiaries that shortfall should be met from the corpus of the trust. Having regard to the terms of the trust deed, the WTO held that except for the amounts earmarked for six sons of the settlor, which was to be considered only in their respective assessments, the entire corpus was liable to assessment in the hands of the trustees under section 21(4). On appeal, the AAC upheld the assessment made under section 21(4) on the ground that the shares of the beneficiaries in the corpus of the trust were not known. On second appeal, the Tribunal, by majority, held that the portion of the trust-fund which bore the same proportion as the aggregate amount of annuities paid to the beneficiaries…

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