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The Commissioner Of Income-Tax, ... vs Kamalini Khatau on 23 December, 1977
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15. It may be pointed out that the provisions of the Wealth Tax Act in Section 21 are similar to the provisions of Sections 161 and 164 of the Act of '1961. In Commissioner of Wealth-tax v. Trustees of Nizam Family Trust, (1977) 108 ITR 555 at p. 593, (1977 Tax LR 998 at p. 1009), Bhagwati J., speaking r the Sunreme Court has observed:-

"This Court also observed that 'the same considerations must apply in the interpretation of Section 161(2) of the Income-tax Act, 1961' (as was applicable under Section 41 of the Act of 1922). The same view, it may be pointed out, was taken by this Court in an earlier decision in Commissioner of Income-tax v. Nandlal Agarwal, (1966) 59 ITR 758 : (AIR 1966 SC 899). These decisions given tinder the Income-tax law must apply equally in the interpretation of Section 21, since the relevant provisions of both the statutes are almost identical. That was pointed out by this Court in Commissioner of Wealth-tax v. Kripashanker Dayashanker Worah, (1971) 81 ITR 763, 768: (1971 Tax LR 1756 at pp. 1758-59) (SQ, where it was said:

16. In this decision in the Trustees of Nizam's Family Trust, (1977 Tax LR 998) the Supreme Court approved the earlier decision of this High Court in Commissioner of Wealth-tax v. Kurn. Manna G. Sarabhai, (1972) 86 ITR 153 1 (1972 Tax LR 377) (Gui). At page 177 of the report, Bhagwati C. J., as he then was, speaking for the Division Bench consi-sting of himself and T. U. Mehta J., in the Gujarat High Court explained the legal position under S. 21 of the Wealth Tax Act on the same lines as is subsequently explained in the Supreme Court decision in the Trustees of Nizarn's Family Trust case~ Dealing with the provisions of S. 21 sub-section (4) at page 178(of ITR) , (at, p. 388 of Tax LR) of the report, he observed-

"The caution administered by this Court shall always be borne in mind in construing the provisions of the Indian statute. The provisions of the Indian Income-tax Act shall be construed on their own terms without drawing any analogy from English statutes whose terms may superficially appear to be similar but on a deeper scrutiny may reveal differences not only in the wording but also in the meaning a particular expression has acquired in the context of the development of law in that country.

19. In our opinion, therefore, -in the light of the caution administered by the Supreme Court in the earlier case of Vazir Sultan and Sons and reiterated in A. Gajapathy Naidu's case, it is not possible for us to rely on the concept of receipt in the hands of the beneficiary under a discretionary trust under the Income-tax law in England for the purpose of eliciting the legal position under S. 164 of the Act of 1961. As we have pointed out above, the language of S. 161 and S. 164 is different. Not only has the legislature used the terminology" the tax shall be levied" under Section 161(1) while using in S. 164 the words "tax shall be charged", but igain S. 161(1) mentions that "the tax shall be levied upon and recovered from the representative assessee, subject to the other provisions contained in this Chap ter, in like manner and to the same ex tent as it would be leviable upon and recoverable from the beneficiary". As the Supreme Court has pointed out in Trustees of Nizam's Family Trust case (1977 Tax LR 998 (SC)) the words "im like manner and to the same extent" in S. 161 are the words which bring in the concept of implicit right of the tax authorities to proceed against the trus tees or against the beneficiary when there is a single beneficiary or in the case of there being more beneficiaries than one, the shares of the beneficiaries are determinate and known. Therefore, even the provisions of S. 161(1) which by necessary implication give an option to the tax authorities to proceed either against the representative assessee or against the beneficiary, but qua the representative assessee authorized the tax authorities to levy the tax and recover it from the representative assessee in the manner and to the same extent as it would be leviable upon and recover able from the beneficiary, are to yield to other provisions of Chap. XV.

22. In our opinion, our task has become easier since the decision of the Supreme Court in Trustees of Nizam's Family Trust case (1977 Tax LR 998) (SC) which was decided by the Supreme Court as recently as May 3, 1977 and since in the case falling under S, 21(4) which is analogous to S. 164 where the beneficiaries are more than one and their shares am indeterminate and un-. known the trustees are assessable in respect of the benefit and in such a cave Obviously it is not Possible to make direct assessment on the beneficiaries because their shares are indeterminate and unknown and that is why it is Provided that the assessment may be made on the trustees, that is, the representative assessee as if the income in the hands of the representative assessee were the income of an association of persons. In our view, after the decision of the Supreme Court in Trustees of Nizam's Family Trust case there is no scope for any difficulty posed by the language used in Arvind Narottam's case (AIR 1970 Guj 167) that the income in the hands of the beneficiary when the beneficiary receives the income in exercise of the discretion of the trustees under a discretionary trust would be charged to income-tax.