THE TRUSTEES OF GORDHANDAS GOVJNDRAM FAMILY A v. THE C.l.T. BOMBAY
Case at a glance
- Bench
- JAGANMOHAN REDDY, H R KHANNA
Provisions considered
Key paragraphs
- Para 11.T. (Hegde, J.) 1053 As mentioned earlier, the Trust is known as "Gordhandas Govindram Family Trust". That is a clear pointer. That &hows that the Trust was primarily intended fOl' the benefit of the family :of Gordhandas G:ovindram. This is made further clear from the…
Judgment
The High Court has answered both these questions in favour of the Department and against the assessees. Hence these appeals, The facts of this case lie within a narrow compars Govindram Go~dhandas Seksar!a; Ramnath Gordhandas Seksan~, Makhanlal Gordiiandas Seksana and Bholaram Gordhandas Seksaria consti tuted a Trust on June 11, 1941 in respect of a SllI!l of Rs. 11 lacs (Rupees eleven lacs). That Trust was known as 'Gordhandas Govi~dram Family .. TruS'l: .. ClaUSt. (2) ~f the Trust deed says ~t 1t was created ~or g1vmg help or relief to such pcor Vaishaya Hmdoos o_r other Hmdoos as the trustees may consider deserving of help in the maDJler and to the extent hereinafter specified and subjects to the conditions and directions stated in tho next follow ing clauses and/or for the charitable object or objects hereinafter mentioned. " Clause ( 3) (a) of the Trust deed provides that the conditions and directions to be observed and Trustees in the execution of the Trusts herein declared as follows : followed by "Poor Vaishaya Hind0os who are members of Sek saria families shall be preferred to poor V:aishaya Hindoos of Navalgadh not belonging to that family.
" Sulrclauses (b) to ( q) provide for the payment of maintenance and marriage expenses of the poor male or female descendants of Seksaria family. We shall now set out sub-clauses ( r) to ( u) of clause ( 3). They . read:- "(r) Rs. 5/- (Rupees five) per r:ionth may be paid as and by way of maintenance of any poor male Vaishaya Hindoo who may be deserving of help. ( s) Rs .. 5 I - (Rupees five) per month may be paid as and by way of maintenance to any poor unmar ried female Vaishaya Hindoo or a ooor Vaishaya Hindoo or a poor Vaishaya Hindoo widow who may be -deserving of :telp. (t) Rs. 500/· (Rupees five hundred) may be expend· ed or given for tho purpose of meeting the ex· penses of marriage of any poor female Vaishaya Hindoo who may be deserving of help. " (u) Rs. 500/. (Rupees five hundred) may be ex· pended or given for the purpose of meeting the expenses of marriage of any l_)OOr female Vaishaya Hindoo who may be deservtng of help.
" The deed further provides : - "If the income of the Trust Estate is not sufficient to carry out the chz:ities specified in sub-clauses (a) to (u) above the charity specified in an earlier sub-clause shall be given priority over a charity specified in a later sub clause. " Fr,,.n the above, it is clear that charity provided was primarily for the benefit of the members of the family of Seksaria, no doubt including both male and female descendants. It is also clear from the deed that the amounts ·provided for the payment of main tenance and marriage eigienses for the poor members of the Seha ria family is b6und to take away a substantial part of the income of the trust, if not the whole of it. -· E. F G H TRUSTEES OF GORDHANDAS v. c.
T. (Hegde, J.) 1053 As mentioned earlier, the Trust is known as "Gordhandas Govindram Family Trust". That is a clear pointer. That &hows that the Trust was primarily intended fOl' the benefit of the family :of Gordhandas G:ovindram. This is made further clear from the various provisions in the Trust deed. A reading of the Trust deed as a whole clearly goes to prove that the charity under that deed begins with the family of Gordhandas Govindram and possibly ends with it. Charity in favour of the Vaishaya Hindoos other than the members of the family of Gordhandas Govindram is not only marginal, but also quite tenuous. We shall now take up the two questions of law referred to the High Court to ascertain its opinion. It was contended before the High Court that the Wealth-tax Act does not provide for levy of any tax on Trusts. As seen earlier, this contention did not find favour with the High Court.
But that contention was repeated before this Court. In order to decide that contention, it is neces sary to refer to three provisions in the Act viz. Sections 3, 5 ( 1 )(i) and 21. Section 3 is the charging section. It says : - "Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the 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 com pany at the rate or rates specified in the Schedule. " S«tion 5 provides for exemption in resp«t of certain usets. One ol the exemptions provided is in respect of any property held by an assessee under Trust or other logal obli~ation for any public purpose of a charitable or religious nature in India. Section 21 to the extent material for our present purpose may be recast thus:- "In the case of assets chargeable to tax under this Act which are held by a Trustee appointed under a Trust deed by a duly executed instrulll.ent in writing, whether testamentary or otherwise, the wealth-tax shall be levied upon and recoverable from the trustee in the like manner and to the same extent as it would be levi able upon and recoverable from the persons on whose the provisions of this behalf the assets are held, and Act shall apply accordingly.
" It was urged that .unlike the charging section in the income tax Act, the charging. ~tion in the Act does not provide for thll levy of tax on assoc1ahon of persons. assessing an individual or Hindu undivided family or a company. Trustees c~nnot be considered eithrr individual or as Hindu Un- It merely provides 1054 SUPREME COURT R!!PORTS [1973] 2 S.C.R. divided Families or Companies. They could have been charged A .as an .association of persons. But that body is not assessable under the Act. Hence, the trustees. are not chargeable under the Act. It was c0nceded at the hearing that sec. 5 ( 1 )(i) as well as s. 21 proceed on the basis that a Trust property is also liable to be taxed under ithe Act. But what was urged btfore us was that there is a lacunae in the charging section and, therefore, the trustees of a B Trust cannot be taxed under the Act. We see no merit in this con- tention. · In Commissioner of Wealth-tax, Bihar and Orissa v.
Kripa sha!'lkar Dayashanker Worah,( 1) the contention raised was trustees could not be assessed under the Act as Sec. 21 ( 1) of the Act provides for assessing the trustees who held the Trust property C In law, a trusi.ees does not hold the trust ·"on behalf of" others. property "on behalf of" others. Hence, trustees cannot be assessed to tax under the Act. That contention was rejected by this Court. No contention was raised in that case that trustees did not come within the scope of sec. 3 of the Act. The judgment in that case proceeded on the ~asis that trustees can be assessed to wealth-tax D in respect of the trust property oi. which they are trustees. There is also no dispute thats. S(l)(i) of the Act proceeds ·on the b~sis it hat a trust property comes within the scope of the Act. Sec. 3 of the Act does bring within its scope· an individual which expression in view of the Central General Clauses Act in -eludes individuals as well, unless the context otherwise indicates.
E In this case, the context, far from not indicating that the individual does not include individuals, clearly shows at any rate so far as individuals. As the the trustees are concerned that it Indian Income-tax Act provides for the assessment of "an associa- tion of persons", the context therein may indicate that individual does not include individuals. But such an interpretation is not F permissible when we deal with sec. 3 of the Act. includes In Commisslone• of Income-tax, Madhya Pradesh and Bhopal v. Sodra Devi, ( 2 ) this Court observed : - "The word assessee is wide enough to cover not only an "individual" but also a Hindu undivided family, com pany and local authority and every firm and other asso ciation of persons or the partners of the .firm or the members of the association individually. " . In V. Vnugopala Ravi Varma Rajah v. Union of India and ) a question arose whether s. 3 of the Expenditure-tax Another,( 8 Act, 1957, which reads:- (1) 81 I.T.R. 763.
(2) 32 I.T..R. 615 at 620. (3) 74 l.T.R. 49. G H A B c TRUSTEES OF GORDHANDAS v. c.I.T. (Hegde, /.) 1055 "(1) Subject to the other provisions contained in this Act, there shall be, charged for every financial year commencing on and from the first day ol April, 1958, a tax (hereinafter referred to as expendi ture-tax) at the rate or rates specified in the Schedule in respect of the expenditure incurred by any individual or Hindu undivided family in the previous year ........ " brought within the net of taxation a Mappilla Marumakkattayam family. As seen eadier, under s. 3 of the Expenditure Tax Act, the only entities which are mentioned, are inc!ividuals or HDidu . undiVided family. This Court came to the conclusion that Map pilla Marumakkattayam Family could also be assessed as an individ11al. n E In Subashini Karuri and A11othtr v. Wealth-tax Officer, Cal- c111ta and Another, (') the Calcutta High Court opened that the joint trustees could be assessed as individuals under 1be Act.
A similar view was taken by the Bombay High Coul't ill Abhay L Khatau and Others v. Commissioner of Wealth-ta:;:, Bombay ·city II.('). We are in agreement with that view. We, according .ly, agrees with the High Court and hold that the trustees of trust, with which we are concerned in these appeals, constitute an assessable unit under the provisions of the Act. ' Now, let us tum to the other question viz. whether the trust in question can be considered as a trust created for public purpose of a charitable or religious nature. As seen earlier, question was created primarily for the benefit of the members of the family of Gordhandas Govindram Seksaria. That is clear from the title given to the Trust as well as from the various provisions to which we have made reference earlier. Therefore, it is not possible to hold that the Trust in question is a Trust for any public purpose. It is clearly a private Trust.
The character of the Trust in question came to be considered by the Bombay High Court in Trustees of Gordhandas Govindram Family Charity Trust v. Commissioner of Income-tax (Central), Bombay, ( 1 ) under sec. 4(3) (i) of the Indian various provisions, the High Court opined that it was not a trust Income-tax Act. After examining F G H (1) 46 I.T.R. 953. (3) 21 IT.R. 231 at 237. (2) 57 l.T.R. 202. . 1056 &UPREME COURT REPORTS [1973] 2 s.c.B.. for charitable purpose within the meaning of Indian Inc.ome-tax Act, 1922. It was held that the primary purpose of the settlor was lo benefit the members of his family and remotely 311d indirectly to be.ntfit tho general public. We agree with that cqnclusion. The decision in the above case came up for considration by this Court in Trwtees of the Charity Fund v. Commi.ssioTUJr of Income-tax, Bombay. ( 1). ·This Court did not differ from the view taken by the High Court. But distinguished the same. In the result, these appeals fail and they are dismissed with costs-one bearing fee. o.c. Appeal dlsmlued. A B c .. , (I) 36 IT.R. 513.
Precedent status how later indexed judgments have treated this case
No known negative treatment found in the Courts & Cases corpus.
This is a result about the indexed corpus, not a finding that the judgment remains good law. Coverage may be incomplete.