Law:

Section:

Section 164 of the Income-tax Act, 1961 [Corresponding to section 41(1) of the Indian Income-tax Act, 1922] - Trust/Trustees - Charge of tax where shares of beneficiaries unknown - Under a deed of trust assessee was given babuana grant in respect of number of villages for his separate enjoyment - As per terms of said trust deed income from certain villages specified in schedule B was to be wholly devoted to performance of certain ceremonies of deities and income from certain other villages specified in schedule C was to be devoted for maintenance, upkeep, repairs and preservation of palaces, temples, gardens, tanks and other appurtenances mentioned in trust deed - Assessee claimed that properties both in schedule B and C were part and parcel of same endowment in favour of deities and that properties being vested in deities or held in trust for them by him, who was first trustee under terms of proviso to section 41 of 1922 Act, it should be deemed that each of deities installed in various temples enumerated in document had an equal share out of income of properties mentioned in schedule B and C and therefore, assessment should be made on that basis - Tribunal held that trust document created two different kind of trusts, that since income from schedule B properties was wholly devoted to puja of deities, it should not be assessed at maximum rate under first proviso to section 41 but so far as income from schedule C properties was concerned, as beneficiaries were not judicial persons, income thereform must be assessed at maximum rate - Whether section 41 of 1922 Act does not make any distinction as to whether properties are vested in trustees or vested in beneficiaries and it is only concerned with disbursement of income over determinate objects of trust in defined shares or otherwise - Held, yes - Whether reading trust dead as a whole, beneficiaries of income from both schedule B and Schedule C properties were part and parcel of same trust, though it was enjoined upon assessee to spend income from properties in two schedules in two different ways; income from both properties were to be spent over determinate objects, namely deities which were undoubtedly…

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