All these appeals involve consideration of common and identical points.
These were heard on the same date. We, therefore, consider it appropriate to dispose of these appeals by this common order.
"(1) Your appellant being aggrieved by the order passed by the learned Dy. CWT presents this appeal against the same on the following other grounds.
(2) The order passed by the learned Dy. CWT is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now.
(3) The learned Dy. CWT has erred in holding that the trust is discretionary. The appellant submits that the shares of the beneficiaries are specific. It is submitted that it should be held as a specific trust and the same should be taxed under s. 21(1) of the WT Act. The appellant further submits that the deductions as provided under s. 5(1)(A) of the WT Act should have been allowed and the net wealth should be determined accordingly.
(4) Without prejudice to the above it is submitted that even if it is to be held to be a discretionary trust what is to be assessed is life interest and the remaindermens interest. The appellant further submits that if each of this is below the minimum amount liable to tax then there would be no tax payable.
(5) The appellant further submits that from the total value of the trust the value of the life interest and remaindermens interest is to be deducted and the balance amount is not liable to tax. The appellant submits that provisions of s. 21(1)(A) are applicable to the trust assessable under s. 21(1) and not s. 21(4). It is submitted that the balance of the wealth will not be liable to tax.
(6) Without prejudice to the above the appellant submits that even if it is held that the balance of wealth is taxable then if the same is below the minimum amount not liable to wealth-tax again the same will not be liable to tax. It is submitted that the same be held so now.
(7) The learned Dy. CWT has erred in trying to distinguish the decisions of Supreme Court and High Court.
(8) Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing." 3. Shri H. M. Talati, the learned counsel appearing on behalf of these assessees, contended that the facts relating to the aforesaid cases are exactly similar and identical as in the cases of Sangita Trust No. 1 & Ors. vs. CWT (1994) 49 TTJ (Ahd) 477. He, therefore, submitted that the view already taken by the Tribunal in the earlier decisions should be followed.
4. Shri Manoj Misra, the learned Senior Departmental Representative, submitted that the Tribunal in the earlier decision has clearly erred in following the judgment of the Honble Madras High Court in the case of Haresh Anitha Trust vs. CWT (1988) 173 ITR 103 (Mad). He vehemently argued that the earlier decision of the Tribunal in the case of Sangita Trust No. 1 & Ors. (supra) requires a reconsideration.
5. Shri Manoj Misra, the learned Senior Departmental Representative, argued that the Honble Madras High Court in the case of Haresh Anitha Trust (supra) has wrongly held that s. 21(4) cannot be treated as a charging provision and must be treated as a provision intended to facilitate the assessment notwithstanding the fact that it prescribed two different rates. The decision of the Honble Madras High Court is mainly based on the expression "leviable" used in s. 21(4) as against the expression "tax shall be charged" used in s. 164 of the IT Act. The Honble Madras High Court had held that in s. 21(4) the word used is "leviable" while the word "charged" is used in charging provisions contained in s. 3 of the Act. These two words "charged" and "leviable" cannot be treated as synonymous. The Court therefore held that s. 21(4) cannot be construed as a charging provision and unless there was clear provision in s. 21(4) taking away the benefit of the exemption of Rs. 1 lakh the scope of s. 21(4) cannot be extended so as to convert it into a charging provision. It was therefore held that wealth-tax could not be levied in respect of net wealth of the assessee discretionary trust where the net wealth was less than Rs. 1 lakh.
5.1 Shri Manoj Misra, the learned Senior Departmental Representative, submitted that the judgment of the Honble Madras High Court in the case of Haresh Anitha Trust (supra) is apparently contrary to an earlier decision of the Supreme Court in the case of CWT vs. Trustees of H. E.H. Nizams Family (Remainder Wealth) Trust (1977) 108 ITR 555 (SC). The Honble Supreme Court has clearly held that s. 3 of WT Act must yield to s. 21, as s. 21 makes a special provision for assessment of the trustee of a trust. The judgment of the Honble Madras High Court thus does not lay down the correct law as it is clearly contrary to an earlier decision of the Supreme Court.
5.2 Shri Misra, the learned Senior Departmental Representative, further submitted that the Honble Supreme Court in Ujagar Prints vs. Union of India & Ors. (1989) 179 ITR 317 (SC) has clearly held that the word "levied" is a wide and generic expression. It is an expression of wide import and takes in all the stages of charge, quantification and recovery. He also invited our attention towards the judgment of the Supreme Court in the case of CIT vs. Kamalini Khatau (1994) 209 ITR 101 (SC) wherein it was held that the word "charged" in the context in which it is used in s. 164 means only "levied". Shri Misra, the learned Senior Departmental Representative, then invited our attention towards various judgments in relation to the interpretation of statutory provisions. He relied upon the judgment of the Supreme Court in the case of CGT vs. N. S. Getti Chettiar (1971) 82 ITR 599 (SC) to support his contention that the words in statute are to be interpreted in the setting in which they are used and the purpose that they are intended to serve. He then cited the judgment of the Supreme Court in the case of CED vs. Alladi Kuppuswamy (1977) 108 ITR 429 (SC) to support his contention that it is not for the Court or the Tribunal to strain and stress language of section so as to enable taxpayer to escape tax.
5.3 Shri Misra, the learned Senior Departmental Representative, also submitted that the Finance Ministers speech can be taken as aid for ascertaining object and purpose of legislation. He relied upon the judgment of the Supreme Court in the case of K. P. Varghese vs. ITO (1981) 131 ITR 597 (SC) to support this contention. Shri Manoj Misra, the learned Departmental Representative, then strongly urged that the earlier decision of the Tribunal based on the judgment of the Madras High Court in the case of Haresh Anitha Trust (supra) requires a reconsideration and reversal thereof as the judgment delivered by the Madras High Court is patently incorrect and is clearly contrary to the earlier decision of the Supreme Court in the case of H. E. H. Nizams Family Trust (supra). He also placed reliance on the judgment of the Supreme Court in the case of Distributors (Baroda) P. Ltd. vs. Union of India & Ors. (1985) 155 ITR 120 (SC) to support his prayer for reconsideration of the earlier decision of the Tribunal.
5.4 The learned Senior Departmental Representative submitted that as regards the other grounds raised in the assessees appeals, the matter is covered by the earlier decision of the Tribunal in the case of Sangita Trust No. 1 & Ors. (supra). He did not make any further submissions in relation to such other points.
6. In the rejoinder, the learned counsel for the assessee vehemently argued that the continuity and consistency in judicial decision is an essential requirement. The Tribunal should not take a view different than it has consistently been taking in large number of cases where the Tribunal has followed the judgment of the Madras High Court in the case of Haresh Anitha Trust (supra). He also submitted that the judgment of the Supreme Court in the case of Ujagar Prints (supra) has also been duly considered by the Tribunal in the earlier decision in the case of Sangita Trust No. 1 & Ors. at page 3 of the said order. The Tribunal has thus taken into consideration all the arguments before rendering the decision in the case of Sangita Trust No. 1 & Ors. (supra).
Therefore, there is no justification in reconsideration of the view consistently taken by the Tribunal in earlier similar matters. Shri Talati, the learned counsel, also invited our attention towards various observations made by the Honble Supreme Court in the case of Kamalini Khatau (supra) with a view to indicate that the question for determination before the Supreme Court in that case was entirely different. The findings given by the Supreme Court that the word "charged" in the context in which it is used in s. 64 means only "levied", have to be understood in the light of the facts of that case which are clearly distinguishable than the facts of the present case.
He also invited our attention towards the observations made by the Honble Supreme Court in the case of Jyotendrasinhji vs. S. I. Tripathi & Ors. (1993) 201 ITR 611 (SC). Shri Talati, the learned counsel for the assessee, further brought to our notice the judgment of the Gujarat High Court in the case of CIT vs. Maganlal Mohanlal Panchal (HUF) (1994) 210 ITR 580 (Guj) wherein it was held that the Tribunal is bound to follow the sole judgment of different High Courts. Since the decision of the Madras High Court in the case of Haresh Anitha Trust (supra) is the only judgment on this point, Shri Talati, the learned counsel for the assessee submitted that the Tribunal was bound to follow the said judgment in view of the aforesaid judgment of the jurisdictional High Court. He also placed reliance on the judgment of the Honble Gauhati High Court in the case of CIT vs. Highway Construction Co. (P) Ltd. (1996) 217 ITR 234 (Gau) to support this proposition. The learned counsel for the assessee also invited our attention towards the judgment of the Madras High Court in the case of CIT vs. L. G. Ramamurthi & Ors. (1977) 110 ITR 453 (Mad) wherein it was held that no Tribunal of fact has any right or jurisdiction to come to a conclusion entirely contrary to the one reached by another Bench of the same Tribunal on the same facts. He, therefore, submitted that the Tribunal should continue to follow the judgment of the Madras High Court in the case of Haresh Anitha Trust (supra) in the absence of any contrary view taken by any other High Court on this point.
7. We have carefully considered the rival submissions made by the learned representatives of the parties and have also carefully gone through all the judgments cited before us by the learned representatives of both sides.
7.1 Before we proceed to deal with the contentious issue which was argued by the learned representatives at great length as to whether we should follow the judgment of the Madras High Court in the case of Haresh Anitha Trust (supra) and the earlier decision of the Tribunal in the case of Sangita Trust No. 1 & Ors. (supra) or there is necessity of reconsideration of the earlier decision given by the Tribunal, we would first like to deal with various other grounds which are covered by the earlier decision of the Tribunal in the case of Sangita Trust No. 1 & Ors. (supra).
7.3 As regards ground No. 3 is concerned, the learned counsel for the assessee was himself fair enough to state that this ground has been decided against the assessee in the earlier decision of the Tribunal in the case of Sangita Trust No. 1 & Ors. (supra). Respectfully following the reasons and conclusions arrived at by the Tribunal in paras 6 and 7 of the said order, we hold that all these assessees have rightly been held to be discretionary trusts and the provisions of s. 21(4) are clearly applicable and the assessees are not entitled to any exemption/deduction as provided under s. 5(1A) of the Act. The findings given by the CIT(A) in relation to this ground are, therefore, confirmed.
7.4 As regards the grounds 4 and 5 are concerned, we respectfully follow the earlier decision of the Tribunal in the case of Sangita Trust No. 1 & Ors. (supra) and hold that in case of a private discretionary trust where the shares are indeterminate or unknown it is beneficial interest alone which is assessed to wealth-tax in the hands of the trustees and not the entire value of the corpus of the trust properties. We therefore accept the assessees contention that an aggregate of only the life interest and the remaindermens interest will be assessable to wealth-tax in the hands of these discretionary trusts.
The aforesaid findings are supported by elaborate reasons given by the Tribunal in paras 13.4 to 13.8 of its order dt. 30th Dec., 1993, in the case of Sangita Trust No. 1 & Ors. (supra). In view of the aforesaid findings we also confirm that the balance of the value of the corpus of the trust property which is in excess of the aggregate value of the life interest and the remaindermens interest would escape the liability towards the wealth-tax, as the provisions of s. 21(1A) are not applicable in relation to assessment of a private discretionary trust, as it is clear from a reading of the provisions of s. 21(1A) that such a provision was introduced only in relation to a specific trust.
8. We will now consider ground No. 6 which involves consideration of the point which was argued at great length by the learned representatives of the parties.
8.1 At the outset we must state that Mr. Manoj Misra, the learned Senior Departmental Representative, has successfully been able to persuade us to reconsider our earlier decision so far as it relates to that part of the earlier decision which was based on the judgment of the Madras High Court in the case of Haresh Anitha Trust (supra).
8.2 We are fully conscious and aware about well settled principle of law that ordinarily any Court or the Tribunal should be reluctant to overturn a decision taken by the Bench of the Court on identical facts in the past. Continuity and consistency in judicial decisions is a time honoured principle of law. Therefore we will have to first seriously consider as to whether we can validly take a view different than the view earlier taken by the Tribunal, Ahmedabad Bench, in the case of Sangita Trust No. 1 & Ors. (supra) in which one of us, namely, the Accountant Member was a party.
8.3 After giving a very thoughtful and deep consideration to the various submissions made by the learned Senior Departmental Representative and after going through the judgment of the Supreme Court in various cases relied upon by him, we are of the considered opinion that there are overriding considerations and reasons in the important judgments of the Supreme Court cited by the learned Senior Departmental Representative, which compel us to reconsider our view and review our earlier decision in the case of Sangita Trust No. 1 & Ors.
in which we had followed the decision of the Madras High Court in the case of Haresh Anitha Trust (supra).
9. It will be imperative to reproduce the findings given by the Honble Supreme Court in the case of Distributors (Baroda) P. Ltd. vs. Union of India & Ors. (1985) 155 ITR 120 (SC) at 140 : "But, even if, in our view, the decision in Cloth Traders case is erroneous, the question still remains whether we should overturn it.
Ordinarily, we would be reluctant to overturn a decision given by a Bench of this Court, because it is essential that there should be continuity and consistency in judicial decisions and law should be certain and definite. It is almost as important that the law should be settled permanently as that it should be settled correctly. But there may be circumstances where public interest demands that the previous decision be reviewed and reconsidered. The doctrine of stare decisis should not deter the Court from overruling an earlier decision, if it is satisfied that such decision is manifestly wrong or proceeds upon a mistaken assumption in regard to the existence or continuance of a statutory provision or is contrary to another decision of the Court. It was Jackson, J., who said in his dissenting opinion in Massachusetts vs. United States 333 US 611 : "I see no reason why I should be consciously wrong today because I was unconsciously yesterday". Lord Denning also said to the same effect when he observed in Ostime vs.
Australian Mutual Provident Society (1960) AC 459, 480 : "The doctrine of precedent does not compel your Lordships to follow the wrong path until you fall over the edge of the cliff". Here we find that there are overriding considerations which compel us to reconsider and review the decision in Cloth Traders case." 9.1 We may now make a useful reference to the Memorandum explaining the provisions in the Finance Bill, 1970 published in (1970) 75 ITR (St) 81. In paras 19 to 21 at page 89 and in paras 63 and 64 of the said Memorandum explaining the provisions are reproduced hereunder : "19. Changes in the scheme of taxation of the income of private discretionary trusts - Under the existing provisions of the IT Act, income of a private trust is charged to tax at the rates of tax applicable to the personal income of each one of the beneficiaries including his share in the trust income, where the shares of the beneficiaries are specific and determinate. Where such shares are indeterminate or unknown, the trust income is charged to tax as a single unit as if it were the total income of an AOP. This provision affords scope for reduction of tax liability by transferring property to trustees and vesting discretion in the trustees to accumulate the income or apply it for the benefit of any one or more of the beneficiaries at their choice. By creating a multiplicity of such trusts each one of which derives a comparatively low income, the incidence of tax on the income from property transferred to the several trusts is maintained at a low level. In such arrangements, it is often found that one or more of the beneficiaries of the trust are persons having high personal incomes, but no part of the trust income being specifically allocable to such beneficiaries under the terms of the trust, such income cannot be subjected to tax at the high personal rate which would have been applicable if their shares had been determinate.
20. A similar position obtains for purposes of wealth-tax, where also the property of a trust, in which the shares of the beneficiaries are indeterminate or unknown is charged to wealth-tax, as a separate unit, at the progressive rates of tax as in the case of an individual. As the first Rs. 1,00,000 of the net wealth of an individual bears no wealth-tax, such a trust affords scope for avoidance of wealth-tax liability altogether where the net wealth of the trust does not exceed Rs. 1,00,000. Where the net wealth of the trust exceeds Rs. 1,00,000, only the excess bears tax at the progressive rates as stated earlier.
21. In order to put an effective curb on the proliferation of such trusts, it is proposed to subject the income of such trust to tax at a flat rate of 65 per cent or at the appropriate higher rate of tax which would be applicable if such income were the total income of an AOP. The provisions for charging tax at the flat rate of 65 per cent will not, however, apply in the following types of cases : (i) Where none of the beneficiaries of the trust has any other income chargeable to tax.
(iii) Where the trust was created by a non-testamentary instrument before the 1st March, 1970, and the ITO 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 dependent relatives of the settlor, and where the settlor is an HUF exclusively for the benefit of the dependent members of the family.
In these categories of cases, the income of the trust will be chargeable to tax as if it were the total income of an AOP." "63. Taxation of the net wealth of a private discretionary trust - As explained in paragraphs 19 and 20 of this Memorandum, private discretionary trusts afford scope for reduction of tax liability both in respect of income-tax on the income derived from the property settled on such trusts and wealth-tax on the assets of such trusts. In order to put an effective curb on the proliferation of such trusts, it is proposed to subject the assets settled on such a trust to wealth-tax at the flat rate of 1.5% or at the appropriate higher rate of wealth-tax which would be applicable if such assets were held by an individual (who is a citizen of India and resident in India) at the progressive rates of tax applicable in the case of an individual. The flat rate of 1.5% will be applied, under this provision, to the whole of the net wealth without the initial exemption of Rs. 1 lakh which is available under the rate schedule of ordinary wealth-tax in the case of individuals. Where the assets of the trust include lands and buildings in urban areas to which such additional wealth-tax applies (vide paragraphs 52-53 of this Memorandum), such additional wealth-tax will also be chargeable for the purpose of ascertaining whether the appropriate rate of wealth-tax chargeable on such net wealth in the case of an individual is higher or lower than the flat rate of 1.5%.
Where the aggregate of ordinary wealth-tax and additional wealth-tax (if any) exceeds wealth-tax at the rate of 1.5% on the net wealth, the higher amount will be the wealth-tax payable." 64. This provision will be complementary to the proposed provision in the IT Act for charging income-tax on the income of a discretionary trust at the flat rate of 65% or at the appropriate higher rate of tax which would be applicable if such income were the total income of an AOP (vide paragraph 21 of this Memorandum). As under the proposed provision in the IT Act, exemptions are being provided from charge of wealth-tax at the flat rate of 1.5% in the following types of cases : (ii) Where the trust was created by a non-testamentary instrument before the 1st March, 1970, and the WTO 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 dependent relatives of the settlor, and where the settlor is an HUF, exclusively for the benefit of the dependent members of the family.
In these categories of cases, the net wealth of the trust will be chargeable to wealth-tax at the rates applicable in the case of an individual." 9.2 From the foregoing clauses in the Memorandum explaining the provisions contained in the Finance Bill, 1970, it is glaringly clear that the provisions of s. 21(4) of the Act were inserted with a view to put an effective curb on the proliferation on such large number of private discretionary trusts by the device of creation of multiplicity of such trusts. The Honble Madras High Court in the case of Haresh Anitha Trust (supra) has clearly observed that it is undoubtedly true that the intention which appears from the Memorandum, was not to make available the initial exemption of Rs. 1 lakh to a private discretionary trust. However, the Honble High Court then proceeded to render its decision on the basis of the interpretation of the meaning of the expression "leviable" and "charged" used in different provisions contained in the IT Act and the WT Act. The judgment of the Madras High Court in the case of Haresh Anitha Trust (supra) has, therefore, clearly defeated the purposes for which s. 21(4) and other above referred provisions were inserted by the Finance Bill, 1970. In this context it would be imperative to make useful reference to the judgment of the Supreme Court in the case of C. E. D. vs. Alladi Kuppuswamy (supra). At page 305 of CTR and 451 of ITR the Honble Supreme Court has observed as under : ".... There can be no quarrel with this proposition but when the phraseology of a particular section of the statute takes within its sweep the transaction which is taxable, it is not for the Court to strain and stress the language of the section so as to enable the taxpayers to escape the tax. In the view that we take in this case, it is manifest that the legislative intent reflected in the Act of 1937 and the ED Act, 1953, must be given full effect." The Honble Supreme Court in the case of CGT vs. N. S. Getti Chettiar (supra) at page 605 has observed as under : "The dictionary gives various meanings for those words but those meanings do not help us. We have to understand the meaning of those words in the context in which they are used. Words in the section of a statute are not to be interpreted by having those words in one hand and the dictionary in the other. In spelling out the meaning of the words in a section, one must take into consideration the setting in which those terms are used and the purpose that they are intended to serve." The Honble Supreme Court in the case of K. P. Varghese vs. ITO (supra) at page 365 of CTR and 604 of ITR has observed as under : "The primary objection against the literal construction of s. 52, sub-s. (2), is that it leads to manifestly unreasonable and absurd consequences. It is true that the consequences of a suggested construction cannot alter the meaning of a statutory provision but it can certainly help to fix its meaning. It is well-recognised rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided." Again at page 367 of 24 CTR and 608 and 609 of 131 ITR, the Honble Supreme Court has observed as under : "Now, it is true that the speeches made by the members of the legislature on the floor of the House when a Bill for enacting a statutory provision is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the mover of the Bill explaining the reason for the introduction of the Bill can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation was enacted. This is in accord with the recent trend in juristic thought not only in Western countries but also in India that interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible." The judgment of the Honble Madras High Court in the case of Haresh Anitha Trust (supra) will, therefore, have to be considered by the subordinate Tribunals in the light of the aforesaid well settled principles of law relevant to the interpretation laid down by the apex Court. One more reason which compels us to reconsider our earlier decision in the case of Sangita Trust No. 1 & Ors. (supra) is that the Honble Madras High Court while deciding the case of Haresh Anitha Trust (supra) did not at all take into consideration an earlier judgment of the Supreme Court in the case of Trustees of H. E. H. Nizams Family Trust (supra). This judgment was rendered by the Supreme Court on 3rd May, 1977. The judgment in the case of Haresh Anitha Trust (supra) was delivered by the Madras High Court on 15th Feb., 1988. Since the Honble Madras High Court did not take into consideration the prior judgment rendered by the Honble Supreme Court which had a very significant vital bearing on the point in issue, we are of the view that it is necessary for us to carefully go through the judgment of the Supreme Court in the case of Nizams Family Trust (supra) with a view to understand as to whether the judgment of the Madras High Court is in conformity with the view expressed by the Supreme Court or it is clearly contrary to what had already been decided by the Honble apex Court.
10. It will, therefore, be necessary to reproduce the findings given by the Supreme Court in the case of Trustees of Nizams Family Trust (supra) at pages 318 of CTR and 592 and 593 of ITR : "It would, therefore, be clear on a combined reading of ss. 3 and 21 that whenever assessment is made on a trustee, it must be made in accordance with the provisions of s. 21. Every case of assessment on a trustee must necessarily fall under s. 21 and he cannot be assessed apart from and without reference to the provisions of that section. To take a contrary view giving option to the Revenue to assess the trustee under s. 3 without following the provisions of s. 21 would be to refuse to give effect to the words "subject to the other provisions of this Act" in s. 3, to ignore the maxim generalia specialibus non derogant and to deny mandatory force and effect to the provisions enacted in s.
21. It may be noted that, while interpreting the corresponding provisions in s. 41 of the Indian IT Act, 1922, and s. 161 of the IT Act, 1961, this Court in C. R. Nagappa vs. CIT (1969) 73 ITR 626, 632, 633 (SC) approved the following observations made by Chagla, C. J. in regard to the scheme of s. 41 of the Indian IT Act, 1922, in CIT vs.
Balwantrai Jethalal Vaidya (1958) 34 ITR 187, 194 (Bom) : If the assessment is upon a trustee, the tax has to be levied and recovered in the manner provided in s. 41. The only option embodied in sub-s. (2) of s. 41 and that option is that the Department may assess the beneficiaries instead of the trustees,. or having assessed the trustees it may proceed to recover the tax from the beneficiaries. But on principle the contention of the Department cannot be accepted that, when a trustee is being assessed to tax, his burden which will ultimately fall upon the beneficiaries should be increased and whether that burden should be increased or not should be left to the option of the Department. The basic idea underlying s. 41, and which is in conformity with principle, is that the liability of the trustees should be co-extensive with that of the beneficiaries and in no sense a wider or a larger liability. Therefore, it is clear that every case of an assessment against a trustee must fall under s. 41, and it is equally clear that, even though a trustee is being assessed, the assessment must proceed in the manner laid down in the Chapter III.... Sec. 41 only comes into play after the income has been computed in accordance with Chapter III. Then the question of payment of tax arises and it is that stage that s. 41 issues a mandate to the taxing Department that, when they are dealing with the income of a trustee they must levy the tax and recover it in the manner laid down in s. 41'.
This Court also observed that "the same considerations must apply in the interpretation of s. 161(2) of the IT Act, 1961. The same view, it may be pointed out, was taken by this Court in an earlier decision in CIT vs. Nandlal Agarwal (1966) 59 ITR 758 (SC). These decisions given under the Income-tax law must apply equally in the interpretation of s.
21, since the relevant provisions of both the statutes are almost identical. That was pointed out by this Court in CWT vs. Kripasankar Dayashanker Worah (1971) 81 ITR 763, 768 (SC) where it was said : Sec. 21(1) of the Act is analogous to s. 41(1) of the Indian IT Act, 1922. The only difference between the two sections is that where the former deals with assets, the latter deals with income. Subject to this difference, the two provisions are identically worded. Hence, the decisions rendered under s. 41(1) of the Indian IT Act, 1922, have a bearing on the question arising for decision in this case.
It must, therefore, be held to be incontrovertible that whenever a trustee is sought to be assessed, the assessment must be made in accordance with the provisions of s. 21." It is thus clear that s. 3 of WT Act, 1957, imposes charge of wealth-tax "subject to other provisions" of the Act and these other provisions would include s. 21. Therefore, s. 3 must yield to s. 21 including s. 21(4) in so far as that s. 21(4) makes a special provision for assessment of a private discretionary trust at the rates specified in s. 21(4) itself. The provisions of s. 21(4) clearly specify that the wealth-tax shall be leviable upon and recovered from the trustees of a private discretionary trust either at the rates specified in Part I of the Schedule or at the rate of 3% whichever course would be more beneficial to the Revenue. The aforesaid judgment of the Supreme Court clearly supports the view canvassed by the learned Senior Departmental Representative.
11. One more vital point which has compelled us to reconsider our earlier decision is that while deciding the earlier case of the Sangita Trust No. 1 & Ors. (supra) the Tribunal, Ahmedabad Bench had also placed reliance on the Full Bench judgment of the Gujarat High Court in the case of CIT vs. Smt. Kamalini Khatau (1978) 112 ITR 652 (Guj) (FB).
In para 13.3 of the order in the case of Sangita Trust No. 1 & Ors.
(supra) the Tribunal has observed that the view taken by the Madras High Court in the case of Haresh Anitha Trust (supra) is fully supported by the aforesaid Full Bench judgment of the Gujarat High Court. This judgment of the Gujarat High Court has been reversed by the Supreme Court in (1994) 209 ITR 101 (SC) (supra). The Supreme Court in said judgment has clearly observed that the word "charged" in the context in which it is used in s. 164 means only "levied". The observations made by the Supreme Court at page 176 of 119 CTR and 109 of 209 ITR are quoted below : "We may now revert to the High Courts judgment. The majority judgment laid emphasis upon the word "charge" in the marginal note to s. 164 and upon the word "charged" in the body thereof. The charge created by s. 4 was in accordance with and subject to the provisions of the Act and it was held that, therefore, the charge in the case of the special class of representative assessees created by s. 164 prevailed over the charge created by s. 4. In cases falling under s. 164 one had to look only to its provisions rather than to the provisions of s. 161." Again at page 177 of 119 CTR and 111 of 209 ITR, the Supreme Court further observed as under : "As regards the use of the word "charge" in the marginal note and the body of s. 164 in contradistinction to the use of the expression "levied upon" and recovered from in s. 161, the difference in the choice of language was of no significance. The word charged in s. 164 could only be construed as conveying the meaning levied and recovered." 12. In view of the aforesaid findings given by the Supreme Court, the decision of the Madras High Court rendered on the basis of distinction drawn between the meaning of the term "charged" and "levied" in our respectful submission, is not in conformity with the findings given by the Supreme Court.
13. In view of the aforesaid discussions and various judgments, we are of the considered opinion that these assessees which have been held to be private discretionary trusts are liable to tax at the rates prescribed in s. 21(4) or at the rates specified in Part I of the Schedule, whichever course would be more beneficial to the Revenue on the whole of the net wealth without getting the benefit of initial exemption of Rs. 1 lakh or Rs. 1.5 lakh as may be applicable in the respective years. Hence, ground No. 6 taken by the assessees in these appeals is rejected.
14. Ground Nos. 7 and 8 are general in nature and do not require any further discussion or any separate finding in relation to those grounds.
15. Before parting we would like to express our feelings of appreciation and admirations for very brilliant arguments advanced by Shri Manoj Misra, the learned Senior Departmental Representative, in these matters.