Tulzapurkar, J.

1. In this reference made to this court by the Tribunal and the section 27(1) of the Wealth-tax Act, 1957, two questions have been referred to us for our opinion which runs thus :

'(1) Whether, on the facts and in the circumstances of the case, the assessment made in the status of individual under Wealth-tax Act against the assessee in its representative capacity as trustees, in respect of the value of the trust estate which invested in them, minors the value of the life interest of the beneficiaries which has been separately assets in their hand, is legal and valid

(2) Whether, on the facts and in the circumstances of the case, the basis of valuation of the assets held by the trustees, adopted by the wealth-tax authorities and by the Tribunal, is valid and proper ?'

2. The questions relate to the assessment year 1957-58, the relevant valuation date being March 31, 1957. One F. E. Dinshaw, since deceased had created a trust by his will dated July 23, 1934. He died in 1936 leaving behind him vast properties and three children, two daughters, viz., Bachubai and Maneckbai, and one son, Edulji. Long prior to the relevant valuation date Maneckbai, one of the daughters, had died and on the valuation date only Bachubai and Edulji were living. Bachubai was married, but neither Bachubai nor Edulji had any children. The relevant provisions which have an important daring on the questions involved in the case are to be found in clause 11, sub-clause (d), (e), (f), (g), (h), (i), (j), (k) and (l), of the will. The testator had directed his trustees that they shall stand possessed of the capital and income of the trust fund in trust to divide the same into three equal shares and to appropriate one of such shares to each one of these three children the living, namely, Bachubai, Maneckbai and Edulji, but each of these children did not get the share absolutely but each one of them had a life interest in the income of the share allotted to him. The Tribunal in the statement of case has summarised the effect of the aforesaid essential sub-clause of clause 11 of the will thus :

'Stated in brief, the peculiarities of the trust are that each beneficiary was entitled for his or her life only to the income arising out of the moiety of the estate left by the deceased. The corpus of the trust would vest and remained to be vested in the trustees on trust. If any of the beneficiaries died, his or her share from the moiety of the estate and the future income thereon will have to be held on trust for benefit of all or some of the children or remoter children of the beneficiaries. The beneficiaries could also appoint by will without offending the rule against perpetuity, any one for whose benefit his or her particular moiety could be held in trust by the trustees.'

3. As stated earlier, on the relevant valuation date only two children of the testator, viz., Bachubai and Edulji, were living. Non of the reversioners or remainderman was in existence on the said valuation date. They also did not have children nor had they exercised their power of appointment. They were also non-residence in the taxable territories. The trust fund comprised of Indian assets as well as foreign assets and as per the statement filed for wealth-tax purpose the net value of Indian assets left by the deceased was Rs. 1,14,43,836 and the net value of foreign assets left by the deceased was Rs. 1,03,26,160. It appears that a bank, viz., the National and Grindlays Bank Ltd., was appointed as sold trustee to administer the trust by an order passed by this court. This bank which acted as a trustee was the assessee for wealth-tax purpose for the year under consideration. The assessee-bank is a registered bank under United Kingdom law and is a banking company within the meaning of section 5 of the Banking Companies Act. The Wealth-tax Officer first determined the value of life interest of each of the two beneficiaries, viz., Bachubai and Edulji and subjected some life interest to wealth-tax in hands of the beneficiaries. So far as the reversionary interest or remainder interest was concerned, he made a direct assessment on the assessee-bank as the trustee of late F. E. Dinshaw and such assessment was made in respect of trust assets after deducting the value of life interest assessed in the hands of two beneficiaries. Such assessment was made in the status of an individual and as a non-resident. Being aggrieved by the assessment made by the Wealth-tax Officer, the assessee-bank preferred an appeal to the Appellate Assistant Commissioner and several objections were raised by the assessee to the legality of the assessment made against it, but all those objections were overruled and the AAC confirmed the assessment made by the Wealth-tax Officer. The assessee carried the matter in further appeal to the Appellate Tribunal and before the Tribunal several legal objections as well as objections on merits to the assessment made were raised. In the first place, it was contended that since the assessee was a banking company no assessment under the Wealth-tax Act could be made against it under section 45(a) of the Wealth-tax Act. Secondly, it was urged that since the Wealth-tax Act was not applicable to the assessee-bank section 2(1) of the Act was not applicable and, in any view of the matter, the Wealth-tax Officer having once exercised the option given to him by assessing the beneficiary to wealth-tax, he could not once again make another assessment on the trustees well. Thirdly, it was urged that the assessment should have been made against the assessee in the status of a company and not in the status of an individual. Apart from these legal and technical objections, on merits it was contended that the Wealth-tax Officer as well as the AAC had adopted a wrong basis for evaluating reversionary interest. The contention was that the value of reversionary interest should have been the actuarial value of that interest and not the difference between the value of the appropriate portion of the trust property minus the value of the life interest for the purpose of the Wealth-tax Act. The Tribunal rejected all legal and technical contentions as also the contention urged on merits which pertained to the basis of valuation adopted by the lower taxing authorities. While rejecting the assessee's contention on merits the Tribunal observed that in the instant case the fact was that there was no remainderman born on the relevant valuation date and, therefore, the balance of the trust fund, after deducting the life interest of the beneficiaries, had been taxed in the hands of the assessee as trustees and not as the interest of any unborn person but as the assets held by the trustees on the valuation date and that in such a case the value of the assets held by the assessee represented their value. In other words, the basis of valuation of the remainderman's or reversioner's interest adopted by the lower taxing authorities was upheld by the Tribunal. At the instance of the assessee the two questions set out at the commencement of the judgment have been referred to this court for our determination.

4. Mr. Jagtiani appearing for the assessee has principally raised two contentions before us. In the first place, he contended that in view of blanket exemption that was available to the assessee under section 45(a) of the Wealth-tax Act as it stood then, the provisions of the Act were not attracted at all and, therefore, no tax under the Wealth-tax Act could be levied on the assessee, which admittedly was and is a banking company as defined in section 5 of the Banking Companies Act, 1949. Secondly, he contended that the basis of valuation adopted by the taxing authorities below and affirmed by the Tribunal was erroneous, inasmuch as the value of the reversioner's interest ought to have been taken to be actuarial value of such interest and in support of this contention reliance was placed by him upon the decision of the Supreme Court in the case of Commissioner of Wealth-tax v. Trustees of H. E. H the Nizam's Family decided on May 3, 1977, a copy of which decision was made available to us at the hearing.

5. [Since reported as : [1977]108ITR555(SC) ].

6. As regards the first contention which Mr. Jagtiani urged before us, at the outset it may be stated that question No. 1 as framed by the Tribunal and referred to us, though it involves several aspects, does not cover the specific contention urged by Mr. Jagtiani before us was specifically urged before the Tribunal during the course of hearing of the appeal before it and in fact on behalf of the assessee out of five questions that were suggested by the assessee as questions arising out of the Tribunal's order and which should have been referred to this court, the first question as suggested by the assessee in terms of covers the point that is sought to be made by Mr. Jagtiani before us, but even after as many as five questions were suggested by the assessee to the Tribunal for being referred to this court, the Tribunal has in fact opined that only two questions - those which have been actually framed and referred - arose out of its order and, therefore, they were being referred to the High Court. It will thus appear clear that the specific point which has been urged by Mr. Jagtiani before us is strictly not covered by question No. 1, though it is very widely worded. However, since the question was argued before the Tribunal and has been dealt with by the Tribunal in its order, we have permitted Mr. Jagtiani to argue that point before us.

7. In support of his contention Mr. Jagtiani placed reliance upon the original section 45 of the Wealth-tax Act, 1957, as it stood prior to its amendment in 1972. Section 45, prior to its amendment, ran thus :

'45. Act on to apply in certain cases. - The provisions of this Act shall not apply to - (a) a banking company as defined in section 5 of the Banking Companies Act, 1949;.....' (rest of the sub-clauses are not material).

8. What has been urged by Mr. Jagtiani is that the aforesaid provision conferred a blanket exemption to any banking company as defined in section 5 of the Banking Companies Act, 1949, from being assessed under the Wealth-tax Act, 1957, at all, inasmuch as the said provision clearly states that the provisions of this Act (Wealth-tax Act) shall not apply to a banking company as defined in section 5 of the Banking Companies Act, 1949. He urged that no distinction has been made nor are there any words in section 45(a) to show that if a banking company were to hold assets in any capacity other than a banking company, say for instance as a trustee or executor, the exemption would not be applicable. In the absence of any such indication being available in section 45(a) it would be clear that the assessee in the instant case, which is admittedly a banking company as defined in section 5 of the Banking Companies Act, 1949, though it was appointed as trustee of the trust created by F. E. Dinshaw under his will dated July 23, 1934, would fall within the exemption contemplated in section 45(a) of the act and no assessment under the Wealth-tax Act could be made on the assessee. Strong support to his aforesaid contention was sought to be derived by him by comparing the language of the amended section 45 with the language of the amended section 45 after its amendment in 1972. Section 45, as amended by Finance Act, 1972, with effect from April 1, 1972, runs thus :

'45. Act not o apply in certain cases. - No tax shall be levied under this Act in respect of the net wealth of -

(a) a banking company as defined in section 5 of the Banking Companies Act, 1949;.......'

9. Mr. Jagtiani pointed out that the amended section attempted to make the position clear that no tax was intended to be levied under Wealth-tax Act in respect of the net wealth of a banking company, suggesting thereby that if any property was held by a banking company in any representative capacity as a trustee the wealth-tax was intended to be levied thereon but no wealth-tax was intended to be levied only in respect of its assets as a banking company. In contrast, he pointed out that under the old section 45 the provision was to the effect that the provisions of the Act shall not apply to a banking company without making any reference to any net wealth of such company; in other words, the capacity in which the assets were held was immaterial. He, therefore, argued that in the instant case though the assessee-bank was appointed a trustee by F. E. Dinshaw under his will dated July 23, 1934, no assessment on the assessed-bank could be made even in respect of property so held by it as a trustee in view of unamended provision of section 45. The contention so advanced apparently seems to contain some force, but if the real object of the Wealth-tax Act is kept in mind, it will appear clear that the contention is without any substance. It cannot be disputed that the Wealth-tax Act, 1957, was put on the status book for the purpose of bringing to tax the wealth of an assessee; in other words, unless the wealth which was purported to be taxed belonged to the assessee as its or his wealth, the tax was not intended to be levied, If this primary object of enactment is kept in view, it will appear clear that even the provisions of section 45 as they stood prior to its amendment would clearly show that the legislature wanted to create an exemption by providing that the provisions of the Act shall not apply to a banking company so far as the wealth of such banking company itself was concerned. The object of the enactment necessarily carries with it an implication that the exemption contemplated by the old section 45 was intended to apply to the wealth of a banking company. It cannot be disputed that in the instant case under the orders passed by this court the assessee-bank had been appointed the sole trustee of the trust created by F. E. Dinshaw under his will dated July 23, 1934, and that the assessee-bank had no beneficial interest whatsoever in the said trust property. The property was held by the assessee-bank in a representative capacity as a trustee of the trust created by F. E. Dinshaw and, therefore, unless the assessee-bank was in a position to show that the wealth in respect of which assessment was being made in the present proceeding was its wealth or was the wealth in which it had beneficial interest, the exemption contemplated by section 45 prior to its amendment in 1972 could not avail the assessee-bank. This aspect of the matter would become clear if the provisions of section 3 and the definition of 'net wealth' in section 2(m) are carefully scrutinised. Under section 3, it has been provided that subject to the provisions contained in this Act, there shall be charged for every assessment year commencing on and from the very first day of April, 1957, a tax (hereinafter referred to as 'wealth-tax') in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule. The expression 'net wealth' has been defined in section 2(m), which runs thus :

'net wealth' which means the amount by which the aggregate value computed in accordance with the provisions of this Act of all assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in this net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than certain specified debts which have been enumerated therein.'

10. It will thus appear clear from this definition that any property wherever located, 'belonging to' the assessee on the relevant valuation date, would be included in the assets assessable to the wealth-tax. It is obvious that the assets held by a trustee ion trust for others cannot be said to be assets 'belonging to' the trustee so as to be includible in the net wealth. Reference in this connection may be made to a decision of the House of Lords in the case of Heritable Reversionary Co. Ltd. v. Millar M'Kay's Trustee [1892] AC 598, where the question arising under the bankruptcy (Scotland) Act, 1856, was considered. Lord Macnaghten has observed at page 621 thus :

'A man's property is that which is his own, that which belongs to him. What belongs to him is his property. No one in ordinary parlance would speak of lands or funds held only in trust for another as the property of trustee. Land or funds so held are not the trustee's property in any real sense any more than a bankrupt's sequestered estate in the property of the trustee in bankruptcy.'

11. It will thus be clear that the assets or the trust property which were held by the assessee-bank could not be said to be 'belonging to' the assessee-bank but that is really belonged to the beneficiaries under the trust created by the will of F. E. Dinshaw. Looked at the question from the above angle, it appears to us very clear that section 45, as it stood prior to its amendment in 1972, must be interpreted to mean that the exemption contemplated thereby could be available to a banking company in so far as the property belonging to such banking company is concerned and not any property held by such banking property in a representative capacity as a trustee. Having regard to this position, the first contention urged by Mr. Jagtiani fails and the same is rejected.

12. As regard the second contention urged by Mr. Jagtiani, in our view, there is considerable substance and the contention is clearly supported by the decision of the Supreme Court on which strong reliance was placed by him, namely, the decision in Commissioner of Wealth-tax v. Trustees of H. E. H. the Nizam's Family, dated May 3, 1977 - [since reported in : [1977]108ITR555(SC) ]. In that judgment, the Supreme Court has clarified the position beyond any doubt that in the case of a trust where life interest is created a swell as reversionary interests are also provided for, both these interests are to be valued on actuarial basis and this view has been expressed after examination of the relevant provisions of the Wealth-tax Act, particularly the provisions contained in sections 3 and 21 of the Act. Mr. Joshi appearing for the revenue also fairly conceded that the actuarial value should have been adopted by the taxing authorities as well as the Tribunal for the purpose of valuing the reversionary interest in the instant case.

13. In this view of the matter, the questions are answered thus :

Question No. 1 : In the affirmative, in favour of the department.

Question No. 2 : In the negative, in favour of the assessee. the basis of valuation of the assets held by the trustee, adopted by the taxing authorities and the Tribunal, is invalid and improper.

14. In the circumstances of the case, there will be no order as to costs.