John Beaumont, Kt., C.J.
1. This is a case which the Income-tax Commissioner has referred to this Court under Section 66 (2) of the Indian Income-tax Act, and the question which he asks as in his amended case is whether notwithstanding the payment already made of income-tax by the corporation they were properly assessed to income-tax and super-tax or either of them for the year 1928-29 by the Income-tax officer as per his orders of October 11, 1928, and March 11, 1929, in view of the circumstances of the case and the provisions of ss. 40 and 55 of the Indian Income-tax Act, 1922.
2. The corporation referred to are the trustees under a private Act No, IV of 1913 which was passed by the Governor General of India in Council entitled 'an Act for settling certain properties belonging to Sir Currimbhoy Ebrahim, Baronet, so as to accompany and support the title and dignity of a Baronet and for other purposes connected therewith'. Shortly before the passing of the Act Sir Currimbhoy Ebrahim had been created a Baronet and the purpose of the Act according to the preamble was to make provision for keeping up the Baronetcy. By Section 2 of the Act there was constituted a corporation with perpetual succession and a common seal under the style and title of the trustees of the Sir Currimbhoy Ebrahim Baronetcy. That corporation was to consist of the Accountant General of Bombay, the Collector of Bombay, the Chief Presidency Magistrate of Bombay, and the Baronet for the time being. Then by Section 5 certain immoveable properties of the estimated value of twenty lakhs of rupees described in the first and second schedules to the Act were by virtue of the Act vested in the corporation. Section 6 of the Act provided that out of the income of the properties the corporation should pay all rates, taxes, assessments, dues and duties in respect of the said hereditaments and premises and defray the cost of all ordinary repairs and of insuring the same against fire and all other outgoings of every nature whatsoever. Then s. 7 provided for the setting aside of a sinking fund and a repair fund by paying certain fixed proportions of the income into the sinking fund and repair fund. Then under s. 8 the residue of the income after making all the above payments is to be paid to the Baronet for the time being provided he is of full age and using the name of Sir Currimbhoy Ebrahim. Then the Act contained provisions enabling the corporation to sell the immoveable properties and invest the proceeds and there are powers for the Baronet for the time being of jointuring a widow, and under Section 29 the Baronet is to have the actual management of the hereditaments vested in the corporation including the collection of rent.
3. The second Baronet died in March 1928, that is to say, just before the end of the financial year 1927-28. On September 26, 1928, the trustees under the Act made a return for income-tax for the year 1928-29, that is, the year expiring on March 31, 1928, and on October 11, 1928, the Income-tax officer made an order on the trustees to pay the income-tax. On February 22, 1929, the trustees paid the tax. On March 11, 1929, the trustees were assessed to super-tax and they objected to the assessment and it was owing to their objection that this case was stated.
4. It appears from the case that for the previous year 1927-28 there had been an arrangement between the Commissioner and the trustees under which the trustees paid the income-tax and the Baronet paid the super-tax, and the trustees say that when they paid the income-tax for the year in dispute they assumed that the same arrangement would continue and that the Baronet would be charged with the super-tax. The Commissioner, not desiring to do anything unfair or to take advantage of a mistake, has agreed that he will not treat the payment of the income-tax as imposing any liability for the payment of super-tax under s 56 of the Indian Income-tax Act, and that accordingly we should deal with the questions put to us without reference to that section and as though the income-tax for the year 1928-29 had not in fact been paid. On the other hand the assessee agrees not to claim any refund.
5. Now, the argument which Mr. Coltman puts forward on behalf of the assessee--it is really on behalf of the Baronet--is that the general scheme of the Act is to tax the person who actually enjoys the income, so that, he says, where you have property vested in A in trust to collect the income and pay the income over to B, it is B, the beneficiary, and not A, the trustee, who is to be assessed under the Act. The charging section under the Act is Section 3 which provides that:--
Where any Act of the Indian Legislature enacts that income-tax shall be charged for any year at any rate or rates applicable to the total income of an asaessee, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of all income, profits and gains of the previous year of every individual, Hindu undivided family, company, firm and other associations of individuals.
6. I think the corporation constituted by the special Act is an individual within that section. The learned Commissioner seems to treat it as an association of individuals, but I think myself it comes within the term individual, and not an association of individuals, and on the words of that section it seems to me clear' that the trustees can be charged, if you take that section alone.
7. When one comes to the later assessing Sections 22 and 23, they seem to me to contain nothing to prevent the trustees being assessed. But Mr. Coltman relies very strongly on Sections 40, 41 and 42 which contain special provisions for assessing trustees in certain specified cases, as for instance, where the beneficiary is a minor, lunatic or idiot or residing out of British India, and he says that if the Act enabled a trustee to be assessed in any case, it would be quite unnecessary to provide for those special cases of assessing the trustees. Well, I agree that there is a good deal of force in that argument. We were referred to the case of Williams v. Singer: Pool v. Eoyal Exchange Assurance  1 A.C. 65 in which the question whether trustees or beneficiaries should be assessed to income-tax was fully discussed. The learned Law Lords were of course dealing with the English Acts which are worded quite differently from the Indian Act, but I think the conclusion at which Lord Cave arrived is as applicable to cases under the Indian Act as to cases under the English Act. He points out that in a normal case, if you were to assess the trustee and not the beneficiary you would get into all sorts of difficulties, because the trustee might be entitled to allowances and so forth which the beneficiary would not be entitled to, and it would not do to confuse the beneficiary's income with the trustee's income, and therefore he says, generally speaking, the beneficiary is the person who should be charged. But then he points out that in certain cases the trustee might be the person to be charged as, for instance, when he holds property in trust for somebody who cannot deal with it, say, an infant or lunatic, or in cases of trusts for accumulation of income, and then he sums up the matter thus (p. 72):-
The fact is that if the Income Tax Acts are examined, it will be found that the person charged with the tax is neither the trustee nor the beneficiary as such, but the person in actual receipt and control of the income which it is sought to reach. The object of the Acts is to secure for the State a proportion of the profits chargeable, and this end is attained (speaking generally) by the simple and effective expedient of taxing the profits where they are found. If the beneficiary receives them he is liable to be assessed upon them. If the trustee receives and controls them, he is primarily so liable.
8. Now that may be the general rule in the case of an ordinary trustee and beneficiary, indeed I think it is the general rule; but in the present case it seems to me we are dealing with something which is quite unusual. We have by a special Act of the legislature a trust constituted which unless so constituted would not be recognised by the general law because it would infringe the rule against perpetuities. We have a corporation specially created by the Act for the purpose of acting as a trustee under the Act. That corporation has vested in it by the Act certain property. It has to a great extent to manage that property although the Baronet himself is given the power actually to collect the rents and so forth, But the trustees must receive the rents and income as they have to apply a proportion in effecting ordinary repairs and paying for insurance of the property, and they have also to set apart a proportion of the income to constitute the sinking fund and repair fund. There may also be a proportion of the income payable to a widow or widows for jointures and then the balance is payable to the Baronet, It seems to me that in such a case the trustees are a taxable unit in respect of this trust property. It appears from the case that of the total taxable income of the trustees the Baronet receives about seventy-five per cent. and about twenty-five per cent. is expended by the trustees either in management or in establishing the two funds under the Act and plainly in respect of that twenty five per cent. the trustees are the only persons who can be assessed and charged because the income never goes into anybody else's hands It seems to me that the Commissioner is entitled under Section 3 of the Act to assess and charge the trustees, and there is nothing in any other part of the Act, so far as I can see, which prevents him from doing so. There is no express provision that trustees are not to be charged, and it is obviously a convenient course in this case to charge the trustees. The difficulties which arise in the case of an ordinary trustee, who has got other income vested in him--either trust income or private income of his own--on which he may be assessed, cannot arise here because these trustees are constituted simply for the purposes of this Act and they have got the income of this particular property vested in them and nothing else and there is no inconvenience in assessing them. I think, therefore, that in this special case and having regard to the peculiar citcumstances and the peculiar language of the special Act the Commissioner is entitled to assess and charge the trustees both to income-tax and super-tax.
9. I should have said that the charging section in respect of super-tax is Section 55, but that is worded in virtually the same way as Section 3, and most of the argument in this case has proceeded on the basis that the corporation are not liable for the income-tax. If they are liable for income-tax, I think they are also liable for super-tax. In my judgment, therefore, we must answer the question by saying that the corporation were properly assessed to income tax and super-tax for the year 1928-29 by the income-tax officer as per his orders of October 11, 1928, and March 11, 1929.
10. Assessee to pay the costs on the Original Side scale. Costs include costs reserved.
11. I agree.