Beneficiaries Income Tax Act, 1961, Section 164(1), Proviso Whether the second category beneficiaries are not ‘beneficiaries’ within the meaning of proviso (i) to Section 164(1) on the facts of the case? We are of the considered opinion that the second category beneficiaries are also beneficiaries as rightly printed out by the High Court. If the income is not distributed among the first category beneficiaries, the whole income—or such part of it as may not have been distributed among the first category — goes to the second category. There is no reason why it cannot be said that the income is received by the trustees on behalf of both the categories of beneficiaries. Indeed, there is no distinction between the two categories so far as the income of the truest is concerned. The members of the first category too have no right to demand or receive income. They may or may not receive any income. It may well happen that they may not get a single pie either in the year concerned or during the entire period of the trust. If so, how is it begin said that income is being received on their behalf. The second category beneficiaries too have no right to the income but yet they may get whole of it or such part of it as may not have been distributed or paid to first category. Thus, neither category has a right but only an expectation to receive income. In this sense, members of the second category are as much beneficiaries as the members of the first category. The trustees are entitled to choose not to pay a pie out of the income to anyone and invest the whole of it in their own concerns. They were also under no obligation to disburse or distribute the income received in a year in that year or in the following year. For the purpose of Section 164(1) what is relevant is that the income is receivable on behalf of the beneficiaries. It is not necessary that the income is received by the beneficiaries. It is, therefore, difficult to say in the light of the recitals of the trust deed that the income is receivable only on behalf of the first category but not on behalf of the second category beneficiaries. Indeed, Section 164(1) or the proviso (i) thereto does not make any distinction between beneficiaries and beneficiaries — nor is the said expression defined in the Act. It would, therefore, be reasonable to construe and understand the expression ‘beneficiaries’ in its ordinary and normal sense, which means that both categories are beneficiaries. Situation could probably have been different if there had been an obligation upon the trustees to distribute the income received in a year in that very year or in the following year(s) in which event it could probably be said that the trust income is receivable by the trustees on behalf of or for the benefit of the first category beneficiaries only. In this case, there is no such obligation and the income not distributed ultimately goes to the second category. It is immaterial whether that income becomes a part of corpus or not. What is material is that it goes to the second category. It cannot, therefore, be said that income is received only on behalf of the first category and not the second category beneficiaries. Either category could have received the income wholly to the exclusion of the other or both could have received it partly in the manner explained above. [Gosar Family Trust v. C.I.T., (1995) 4 SCC 576 (582, 583)]