1. These 8 appeals by the assessee are against the order of the Commissioner under Section 25(2) of the Wealth-tax Act, 1957 ('the Act') dated 24-1-1981. The assessment years involved are 1971-72 to 1978-79. Since common issues are involved in all these appeals, we have heard them together and dispose of by this common order for the sake of convenience.
2. The main issue for our consideration in these appeals is whether the order of the Commissioner under Section 25(2) is erroneous and bad in law. The wealth-tax assessments in the case of Shri Vimalshah, Shri Bababhai and others, executors of the estate of late Smt. Bai Manek, widow of Sheth Jamnabhai Bhagubhai, for the assessment years 1965-66 to 1978-79, were completed by the WTO on 13-3-1979. On going through the records in this case the Commissioner found that the WTO had allowed incorrect deductions in computing the net wealth of the assessee.
According to the Commissioner the net wealth of the estate of the deceased person is chargeable to tax under Section 19A of the Act and in computing the net wealth of the deceased person taxable in the hands of the executors, one-third value of the wealth in both movable and immovable properties was not taxed in the hands of the executors by the WTO on the ground that the religious trust had vesting interest in one-third share of the property in terms of a will executed by the testatrix in August 1951. Notice was issued to the assessee and after hearing them the orders of the WTO were set aside and direction was given to him to reframe the said orders for the assessment years under appeal as per law. Being aggrieved the assessee came in appeal before us.
3. The submission of the learned Advocate General for the assessee before us was that Smt. Bai Manek, widow of Sheth Jamnabhai Bhagubhai, executed a will dated 25-8-1951 and a codicil dated 3-11-1952. She died on 5-12-1952. Under the will she authorised the executors to make some cash bequeathed after payment of tax of the estate and further it is stated in the will that the three sons of Bababhai and two sons of Bhagubhai, each be given a bungalow constructed by the executors at a cost of up to Rs. 50,000. The other bungalow should be given to the daughter of Bababhai, i.e., Veenaben, costing about Rs. 25,000. Clause 7 of the deed speaks of management or administration of testatrix and after distribution of the property as directed in the will from Clauses 1 to 9. Clause 10 provides for the creation by the executors of a trust under the name and style of Sheth Jamnabhai Bhagubhai Religious Trust and it further provides that the property equivalent to 4 annas in a rupee of 16 annas share of the properties that may remain over after making the dispositions as directed earlier in the will shall be settled on a trust. The other wealth of the trust is stated in Clause 16. It is mentioned in Clause 16 that whatever is left after giving the amounts as above and meeting expenses should go to the aforesaid religious trust. The combined reading of the will and codicil, thus, provides as far as the religious trust is concerned is as under: 0-4-0 share in the residue property in a rupee of sixteen annas.
0-1-6 being the balance of 0-12-0 share after giving 0-10-6 share to relatives from the remaining of the residue property." So far as Shahibag bungalow is concerned, after the death of Bhagubhai and after provisions of residence of the sons of Bababhai a nd Bhagubhai, the same was to be given to the trust. According to the learned Advocate General, the residue property was 51/2 annas in a rupee which comes to the trust and Shahibag bungalow that was clear and the said property vested in the trust on the day when the trust was created. When the property was vested in the religious trust, that property should be excluded from the wealth of the assessee and that should not be taxed in the hands of the executors of the said estate.
He relied on the cases of Navnitlal Sakarlal v.CWT [1977) 106 ITR 512 (Guj.), CIT v. Navnitlal Sakarlal  125 ITR 67 (Guj.) and CWT v.S. Prakasam  125 ITR 772 (Mad.). Shri Talati, the learned counsel for the assessee, also argued for the assessee. He submitted that it is true that provisions of Section 19A was not in the Act when their Lordships of the Gujarat High Court decided the issue in Navnitlal Sakarlal's case (supra) but the decision in the case of the same assessee in income-tax proceedings was given by their Lordships of the Gujarat High Court in the case of Navnitlal Sakarlal's case (supra).
The section involved was 168 of the Income-tax Act, 1961 ('the 1961 Act') which is identical to Section 19A of the 1957 Act. Therefore, the existence of Section 19A does not make any difference on the real issue. He further submitted that a note was submitted to the Commissioner and along with that details were given for the property distributed. The same has not been considered by the Commissioner. If that was properly looked into, there would have been no case for setting aside the assessment orders. The learned Advocate General also pointed out that the income of the trust was excluded from the income of the assessee and on the same analogy the wealth should also be excluded from the wealth of the assessee and the wealth vested in the assessee is exempt under Section 5(1)(i) of the Act. Therefore, one-third value of the wealth representing the share of the religious trust in the estate is required to be deducted in computing the net wealth of the assessee and, therefore, the orders of the WTO were correct. The order of the Commissioner should be set set aside.
4. On the other hand, the contention of the learned departmental representative, Shri Kathuria, was that the assessee had requested the higher authorities for granting exemption in respect of income from the trust as well as the wealth of the trust from both income-tax as well as wealth-tax proceedings. The CBDT issued directions wherein exemption is allowed only in respect of the income of the trust but no exemption in respect of wealth-tax is given. The assessee has not objected to the refusal to exempt from the wealth-tax. The Board has specifically stated that the assessee is liable to be assessed in view of the provisions of Section 19A of the Act. He further submitted that under Section 19A(5) read with Sub-section (6) thereof, the benefit is available to the specific legatee oniy and not to the residuary legatee. Unless the estate is distributed or applied to the benefit of the specific legatees and till the administration of the estate, the share of the residuary legatee cannot be ascertained and when the share of the residuary is not ascertainable, it cannot be deducted from the wealth of the assessee. He further submitted that in this case, the complete distribution to the beneficiaries of the estate has not been done as required by Sub-section (5) of Section 19A and as such there is no question of exclusion of such share simply saying that the trust has 51/2 annas share and that is vested in the trust is not enough. Actual distribution and corapletion of administration is a must under Section 19A. He relied on the decision of CIT v. Bakshi Sampuran Singh  133 ITR 650 (Punj. & Har.).
5. We have heard the rival submissions and considered the material on record. One Bai Manek, widow of Sheth Jamnabhai Bhagubhai, executed a will on 25-8-1951 and a codicil dated 3-11-1952. She died on 5-12-1952.
In the will the description of the property has been given and in Clause 6 of the will it is stated that the executors shall first of all pay over the debit out of the properties mentioned in the will and shall thereafter give and use the properties as directed in Sub-clauses (1) to (9) of Clause 6. Sub-clause (6) of Clause 6 states that the three sons of Bababhai and two sons of Bhagubhai, each be given a bungalow constructed by the executors at a cost of Rs. 50,000 and Veenaben, the daughter of Bababhai, should be given a bungalow costing about Rs. 25,000. Clause 7 speaks of management or administration of testatrix right in the share of commission from Jamnabhai Manukhbhai, managing agents of Gujarat Spinning and Weaving Co. Ltd. Clause 9 provides for Shahibag bungalow. Later on in a codicil it is provided that Bababhai will live in Shahibag bungalow for his lifetime and Rs. 4,000 should be given to him for the maintenance of the said bungalow per mensem. Bababhai was supposed to receive Rs. 4,000 per mensem till his death, i.e., till 1959, and thereafter the bungalow was occupied by his children and finally it was handed over in 1970 to the trust. Apart from this, a list was attached to the will wherein different amounts were mentioned which were to be given to different persons after distribution of the property as directed by the testatrix. In Sub-clause (10) of Clause 6 it is stated that the property equivalent to 4 annas in a rupee of 16 annas of the properties that may remain over after making the disposition as directed hereinabove in the will shall be settled on a trust by the name Sheth Jamnabhai Bhagubhai Religious Trust. It means that if the remaining property is to be at 16 annas, 4 annas property should be given to the trust, 6 annas to the three sons of brother Bababhai, two sons of deceased brother Bhagubhai and nephew, Rajendra Kumar, and 41/2 annas property to 6 daughters of Bababhai, two daughters of Bhagubhai and one daughter of Maneklal. Now, out of 16 annas property only If property remained. Clause 16 states that whatever is left after giving the amounts as above and meeting the expenses should go to the aforesaid religious trust. Therefore, from the will and codicil, it appears that the Shahibag bungalow was handed over to the trust in 1970 and out of 16 annas, remaining property after the distribution of the rights mentioned in Sub-clauses (1) to (9) of Clause 6, the trust should have got 51/2 annas share. The submission of the learned Advocate General was that this is simply a calculation and by calculating the property the interest of the trust can be ascertained and in view of the decision of the Gujarat High Court in Navnitlal Sakarlal's case (supra), it must be taken that the property is vested in the religious trust and is not liable for tax and that it should be deducted from the net wealth of the assessee. The relevant provision of Section 19A reads as under: (5) Separate assessments shall be made under this section in respect of the net wealth as on each valuation date as is included in the period from the date of the death of the deceased to the date of complete distribution to the beneficiaries of the estate according to their several interests.
(6) In computing the net wealth on any valuation date under this section, any assets of the estate distributed to, or applied to the benefit of, any specific legatee of the estate prior to that valuation date shall be excluded, but the assets so excluded shall, to the extent such assets are held by the legatee on any valuation date, be included in the net wealth of such specific legatee on that valuation date.
According to these provisions, there must be a complete distribution to the beneficiaries of the estate and in a case when that interest has been distributed to or applied to the benefit of any specific legatee of the estate prior to that valuation date shall be excluded but the assets so excluded shall to the extent such assets are held by the legatee on the valuation date be included in the net wealth of such specific legatee. The learned departmental representative relied on the decision of the Punjab and Haryana High Court in the case of Bakshi Sampuran Singh (supra) wherein the provisions of Section 168 of the 1961 Act which are analogous to the provisions of Section 19A of the 1957 Act are discussed. In that case there was only a sole beneficiary who was the executor also. The interest was ascertainable in such a case but their Lordships have observed as under: "The assessment in respect of the income from the estate of the assessee's father for the period from May 18, 1970 to December 31, 1970, had been correctly assessed in his hands separately as an executor under the mandatory provisions of Section 168 by the ITO and that income was not includible in his personal assessment. The Commissioner's order had been rightly set aside." (p. 651) The above observation shows that unless there is a complete distribution of administration, property should be assessed in the hands of the executor. In Navnital Sakarlal's case (supra) while applying Section 168(3), there Lordships have pointed out that the conclusion of the Tribunal is due to a mixing up of two concepts. One is the concept under the general law and the other is the concept under Section 168(3). The fact that the executor, i.e., the person who is actually administering the estate of the deceased person, continues to be liable until the distribution takes place is one concept whereas the concept that the residuary legatee is not liable until the administration is complete is another concept altogether. The latter case is governed by the general law. Further, their Lordships have observed as under: (iii) that since by the commencement of 1963-64, the only thing that was left to be done was payment of the estate duty and for that payment the liability was not that of the estate of the deceased, by 1963-64, the residuary estate must be deemed to have been determined and must be said to have taken concrete shape and should have been handed over by SB, the father of the assessee. Administration had reached such a point that one could infer that the residuary estate had been ascertained or was easily capable of being ascertained.
Hence, in spite of the provisions of Section 168(3) of the Act which provided for the liability of the administer, it was open to the ITO to proceed against the assessee as regards his share of the income from the estate." (p. 69) From the above observations it appears that if the administration has reached such a point that one could infer that the residuary estate had been ascertained or was easily capable of being ascertained, in that case in spite of provisions of Section 168(3) of the 1961 Act, which are on par with Section 19A of the 1957 Act which provides the liability of the administrator, it was open to the ITO to proceed against the assessee. This shows that the ITO is not bound but if he wants, he may proceed against the assessee, i.e., the residuary legatee. The other case on which the learned Advocate General relied on was S. Prakasham's case (supra). The relevant observations read as under: There is no invariable rule that an executor cannot shed his character as an executor and assume the character of a trustee under a will before all the debts are discharged and the legacies paid.
Merely because the debts have not been discharged nor legacies paid, it cannot be stated that the executorial functions of the executor have not been completely performed. The existence of debts or liabilities of the deceased is no bar for an executor giving assent in favour of the residuary legatees. An assent may be either express or implied and no formality is required for giving an assent to a legatee. An implied assent to vest the property in the legatee can be inferred from the conduct of the parties and other facts and circumstances of the case. The assent of the executor can be inferred when there is clearly nothing more to be done by way of administration." (p. 772) From the above observations it appears that the existence of debts or liabilities of the deceased is no bar for an executor giving assent in favour of the residuary legatee and that assent can be inferred from the conduct of the parties and other facts and circumstances of the case. But the assent of the executor can be inferred when there is clearly nothing more to be done by way of administration. The above facts and law show that under Section 19A there must be a complete distribution of the assets to the beneficiaries of the estate and that portion only can be deducted from the wealth of the assessee but the view taken by their Lordships of the Gujarat High Court in Navnitlal Sakarlal's case (supra) is that if the administration had reached such a point that one could infer that the residuary estate had been ascertained or was easily capable of being ascertained in that case, it is open to the WTO to proceed against the residuary legatee. In this case the assessee has filed a note before the Commissioner and attached a statement of distribution to that note which appears at page 59 of the assessee's paper book. Some amounts have been shown against the different names and at the back of that the assessee has simply given the dates and no amount. The note at page 59 of the assessee's paper book and some figures mentioned therein do not reveal how and on which date the residuary property was ascertained and capable of being handed over to the trust. Mr. Talati also has not thrown any light on this point as to how residuary property of the trust was ascertained which was supposed to come to the trust. Therefore, we do not agree with the submission of Shri Talati. The Advocate General, Shri J.M. Thakore, is also not correct by saying that trust is entitled for 51/2 annas property which can be ascertained by simple calculation. In this case, the distribution of the property should be made in accordance with Sub-clauses (1) to (9) of Clause 6 of the will. Thereafter, from the remaining property again there will be a distribution and after distribution 141/2 annas share, 11/2 annas residue will go to the trust. These clauses of the deed show that the residue property shall be ascertained not only once but twice. Firstly, after distribution as stated in Sub-clauses (1) to (9) of Clause 6 and the second time after the distribution of property as stated in Sub-clauses (10) to (15).
Moreover, discretion is given to the trustees in some cases to give or not to give the property and apply their discretion. In view of these facts, the actual administration or application of the estate is necessary. If not the complete administration then at least the administration or application of the property should be reached to such a point that one could infer that the residuary estate had been ascertained or was easily capable of being ascertained and there is nothing more to be done by way of administration. In view of the above facts and law, we are of the view that in this case neither there is a complete administration nor had the administration reached to such a point that one could infer that the residuary estate had been ascertained or was easily capable of being ascertained. We uphold the order of the Commissioner.