Judgement

Appeal (No. 97 of 1932) from a judgment of the High-Court upon a case stated under s. 66 of the

Law. Rep. 61 Ind. App. 209 ( 1933- 1934) Trustees of the Sir Currimbhoy v. Commnr. of I.T. Bombay 35

Indian Income-tax Act, 1922.

The question for determination was whether under the above Act the appellants, who were a corporation constituted by Act IV. of 1913 to be trustees of certain properties for the purpose of that Act, were liable to be assessed either for income-tax or super-tax for the year 1929-30 in respect of income from properties vested in them as such trustees.

The matter arose upon an assessment to super-tax, but the question was finally submitted in the reference both as to income-tax and super-tax, and had been so dealt with.

The facts and the material provisions appear from the judgment of the Judicial Committee.

The judgment of the High Court, delivered by Beaumont C.J., and concurred in by Rangnekar J., answered the question adversely to the appellants. The learned Chief Justice was of opinion that under the special Act the trustees were a taxable unit, and that the Commissioner was entitled under s. 3 of the Act of 1922 to assess and charge them, there being nothing in that Act or in the special Act to prevent him from doing so. The case is reported at 33 Bom. L. Rptr. 1549.

1934. Jan. 15, 16, 18. Wilfrid Greene K.C., Sir Thomas Strangman, and Khambatta for the appellants. It is conceded that under the General Clauses Act, 1897, s. 3, sub-s. 39, the word " person " in s. 2 of the Indian Income-tax Act, 1922, includes the appellants. Being, however, merely trustees of the properties vested in them they were not liable to be assessed or charged under the Act. That is supported by the observations of Viscount Cave in Williams v. Singer. ([ 1921] 1 A. C. 65.) The special provisions of s. 38, sub-s. 2, and, more particularly, of s. 40 are unnecessary if the Act makes trustees ordinarily liable to assessment. On that point Hotz Trustees of Simla v. Income-tax Commissioner (( 1930) I. L. R. 11 Lah. 724.) was wrongly decided. The assessment of trustees is incompatible with the provisions of the Indian Finance Act by which the rate of tax is graduated according to the assessees total income ; it would moreover result in double taxation. In any case the appellants were not chargeable in respect of the proportion of the income which they paid over to the baronet; the sum so paid over was not income of the appellants Bejoy Singh Dudhuria v. Income-tax Commissioner. ((( 1933) L. R. 60 I. A. 196.))

Dunne K.C. and R. P. Hills for the respondent. The system of law in India does not recognize a distinction between legal and equitable ownership ; when property is vested in trustees they alone are to be regarded as the owners Chhatra Kumari Devi v. Mohan Bikram Shah (( 1931) L. R. 58 1. A. 279.) ; Indian Trusts Act, 1882, ss. 3, 55, 66. The appellants, and only the appellants, were owners within the meaning of s. 9 of the Act of 1922 of the immovable properties ; they were also the persons by whom the interest from securities was receivable within the meaning of 8. 8. The baronet had merely a right to receive the balance of income. Sects. 38 and 40 are machinery provisions dealing with special cases and do not affect the general question ; the minors, lunatics, etc., referred to in s. 40, are those who are owners of property. The observations of Viscount Cave in Williams v. Singer ([ 1921] I.A. C. 65.), were based upon the terms of the English Acts and are not applicable. Bejoy Singh Dudhuria’s case (( 1933) L. R. 60 I. A. 196.) turned on the rights in a Hindu joint family ; it was not a case of trustee and beneficiary, but of an estate charged under a decree with payment of maintenance. Although this case is not to be determined on the basis of the English income-tax Acts, principles laid down under them are relevant. It is well established that an obligation to apply income in certain ways does not prevent it from be