T.D. Sugla, J.@mdashThis is the assessee'' reference. The assessee are trustees of a trust. The assessment year involved is 1971-72. The Income Tax Appellate Tribunal has referred to this court the following question of law u/s 256(1) of the Income Tax Act, 1961 (for short, "the Act") :
"Whether, on the facts and in the circumstances of the case and on the interpretation of the trust deed dated June 30, 1962, the assessee were liable to pay tax on 75 per cent. of its total income at the maximum rate of 65 per cent. as provided by section 164 of the Income Tax Act, 1961 ?"
2. One Shri Chiranjilal Shrilal Goenka settled some of his properties on trust by an indenture dated June 30, 1962. The indenture, inter alia, provided that the trust income shall be accumulated for 18 years. Thereafter, 25% of the trust fund along with its accumulations will be spent on charity as mentioned in clause 4 of the indenture and the remaining 75% will be handed over to the wife or widow of the settlor''s son, Shri Radheshyam Chiranjilal Goenka, who may be then living and if, at the relevant time, there is no such wife or widow of the settlor''s said son, then that portion of the fund along with accumulations shall be handed over to the heirs of the settlor, such heirs to be determined as if the settlor had died intestate at the date of distribution.
3. The Income Tax Officer accepted the assessee'' claim partly. He held that to the extent of 25% of the trust income which was accumulated for the purpose of ultimately handing over or using for charity, it was not taxable in the hands of the assessees. Regarding the remaining 75% of the income. However, he held that the assessees'' case falls within the four corners of the proviso of sub-section (1) of section 164 of the Act and the income was liable to be assessed at the maximum rate of tax, i.e., 65%. Following his order for the earlier years, the Appellate Assistant Commissioner dismissed the appeal, the Tribunal has also, following its earlier orders in the assessees'' own case, upheld the order of the Appellate Assistant Commissioner. Such orders for the earlier years were not challenged by way of reference or otherwise.
4. The short question that arises for consideration in this reference is whether the assessees'' claim that the remaining 75% of the trust income does not fall u/s 164(1) of the Act is tenable. The relevant provisions of section 164(1) as they stood in the year under consideration have been reproduced in the Tribunal''s order in paragraphs 6. For the sake of convenience, the provisions are reproduced hereunder :
"164. (1) Subject to the provisions of sub-sections (2) and (3), where any income in respect of which the persons mentioned in clauses (iii) and (iv) of sub-section (1) of section 160 are liable as representative assessees or any part thereof is not specifically receivable on behalf or for the benefit of any one person or where the individual shares of the persons on whose behalf or for whose benefit such income or such part thereof is receivable and indeterminate or unknown (such income, such part of the income and such persons being hereafter in this section referred to as ''relevant income'' ''part of relevant income'' and ''beneficiaries'', respectively), tax shall be charged -
(i) as if the relevant income or part of relevant income were the total income of an association of persons, or
(ii) at the rate of sixty-five per cent,, whichever course would be more beneficial to the revenue :
Provided that in a case where -
(i) none of the beneficiaries has any other income chargeable under this Act, or....
(iii) the relevant income or part of relevant income in receivable under a trust created before March 1, 1970, by a non-testamentary instrument and the Income Tax Officer is satisfied, having regard to all the circumstances existing at the relevant time, that the trust was created bona fide exclusively for the benefit of the relatives of the settlor, or where the settlor is a Hindu undivided family, exclusively for the benefit of the members of such family, in circumstances where such relatives or members were mainly dependent on the settlor for their support and maintenance; or....
tax shall be charged as if the relevant income or part of relevant income were the total income of an association of persons."
5. The above provisions require to be considered in the light of the facts such as the age of the settlor''s son Radheshyam, who was about 8 when the settlement was made. Naturally, he was then unmarried. He was unmarried even during the previous year relevant for the assessment years under reference. His age during the previous year was about 17. Thus, questions such as whether Radheshyam will survive the period of 18 years during which the trust income is to be accumulated, whether he will at all marry and whether on the completion of 18 years his wife or widow will be available for receiving that portion of corpus of the trust, are all matters of conjecture. In case he does not marry or ever if he marries but his wife or widow is not available at that time, then the corpus is supposed to go to the heirs of the settlor, and that may include Radheshyam if he is available or may include many others including Radheshyam. In the circumstances, it is difficult to accept that, to the extent of 75% of the income, the share of the beneficiary is known and determinate.
6. Before concluding we may refer to the Madras High Court decision in
7. Accordingly, we are in agreement with the Tribunal in holding that the provisions of section 164(1) of the Act are applicable in this case. The question is, therefore, answered in the affirmative and in favour of the Revenue. No order as to costs.
