1. With the consent of the parties, the four appeals by two different assessees are being consolidated and disposed of by this common order.
The assessees are the trusts created by Ramjilal Jhunjhunwala and Purshottamlal Jhunjhunwaia, respectively. The assessment years involved are 1971-72 and 1972-73. The trusts were created on the same day and are identically worded. In respect of the trust of Ramjilal Jhunjhunwala, the trust property was certain shares in Oudh Sugar Mills. The shares were to be held for the benefit of Manjuladevi for a period of 10 years. Thereafter, the sole and absolute beneficiary would be the wife of the son of Bhagwatiprasad Jhunjhunwala. At the time of creation of the trust, no son was born to Bhagwatiprasad Jhunjhunwala.
However, later a son was born to him. We are concerned with the valuation dates of 31-3-1971 and 31-3-1972. On both these valuation dates, the son of Bhagwatiprasad Jhunjhunwala had not married. The provisions of the trust created by Purshottamlal Jhunjhunwala are identical. There also, the beneficiaries are Manjuladevi for 10 years and later the future daughter-in-law of Bhagwatiprasad Jhunjhunwala. We are considering the valuation dates on which dates the interest of Manjuladevi had already ceased and the properties were held for the benefit of the wife of the son of Bhagwatiprasad Jhunjhunwala.
2. Before the WTO, originally, one return had been filed by the common trustee of both the trusts. The assessments were completed and the tax rate applied was that of AOP. Later on, the WTO had reopened the assessment of both the trusts. The assessments had been made separately of the income arising to the two trusts in the hands of the respective trustees. The WTO had also invoked the provisions of Section 21(4) of the Wealth-tax Act, 1957 ('the Act') and had assessed the trusts at the rate of 1 per cent.
3. The assessees appealed. The AAC dismissed the appeals. The assessees are on further appeal before us. Two points have been taken up. The first is regarding the reopening of the assessments and the second is regarding the application of the higher rate of tax. Shri Doshi, appearing for the trusts, admitted that identical issues had come up before the Tribunal in respect of the income-tax assessments. The Tribunal had held that the reopening of the assessments was valid. The Tribunal had also held that The application of the maximum rate was valid. As far as the first point is concerned, Shri Doshi has admitted that the point is covered against him by the said Tribunal decision. We would adopt the reasonings given by the Tribunal in the income-tax appeals and hold that the reassessments are valid.
4. With regard to the second point, however, Shri Doshi had a further submission to make. He submitted that the beneficiaries are determinate and known and, therefore, the provisions of Section 21(4) would not apply. He submitted that the beneficiary is the future wife of the son of Bhagwatiprasad Jhunjhunwala. It is true that the trust deed did not provide for the contingency of the son not marrying or the contingency of the son dying. However, even then, according to Shri Doshi, the beneficiary will be known and determinate. That is because, according to him, the provisions of Section 83 of the Indian Trusts Act, 1882 ('the 1882 Act') would become applicable and the trustees will be holding the properties for the benefit of the settlor or his legal representatives. Who the settlor is and who are his legal representatives, are known. Therefore, according to him, Section 21(4) is not applicable.
5. We have considered the submissions. In the order disposing of the income-tax appeals on identical point, the Tribunal had upheld the application of Section 164 of the Income-tax Act, 1961, on the ground that the beneficiaries were not known. In para 11 of the said order in IT Appeal Nos. 3374 and 3375 (Bom.) of 1980 dated 23-11-1981 by Bombay Bench 'E', the Tribunal had pointed out that no contingency had been provided for in case the son of Bhagwatiprasad Jhunjhunwala did not marry. It was on that ground that the Tribunal had held that the beneficiaries of the trust were unknown. Now, the only point that survives is to see whether in view of Section 83 it could be said that the beneficiaries are known and their shares determinate. Section 83 reads as follows : Where a trust is incapable of being executed, or where the trust is completely executed without exhausting the trust property, the trustee, in the absence of a direction to the contrary, must hold the trust property, or so much thereof as is unexhausted, for the benefit of the author of the trust or his legal representative.
It will be seen from the above section that it would be applicable where a trust is incapable of being executed, or in a contingency where the trust is completely executed but the trust property is still very much in existence. In these circumstances, the trustees will be holding the properties for the benefit of the author of the trust of his legal representative.
6. In order to avoid the application of Section 21(4) it is necessary that the provisions of Section 21(1) would be applicable. Now. Section 21(1) enjoins the assessment of a trustee direct. The tax liability is co-terminus in quality and quantity with that of the beneficiary if the beneficiary is know and his shares determinate. Section 21(1) would apply only in certain categories of assessees. They are the Court of Ward, Administrator General, Official Trustee, etc., or 'any trustee appointed under a trust declared by a duly executed instrument in writing'. Only in such cases the liability would be limited to the liability of the beneficiary. The beneficiary, therefore, must be a beneficiary specified in the trust deed itself. It is not permissible to look elsewhere to locate the beneficiary or to determine his share.
Section 21(1) requires all these to be specified in the trust deed or the instrument itself.
7. This point has been made clear by the Bombay High Court in the case of CIT v. Lady Ratanbai Mathuradas  67 ITR 504. The facts of the case are not very relevant except for mentioning that the trust deed gave discretion to the trustees in applying the income to the various beneficiaries. The trustees credited the amounts to the beneficiaries' accounts equally in their books. On that basis, a claim was made that the trust income could not be taxed at maximum rate. While rejecting this contention, the High Court pointed out : ...On the other hand, it seems to us that what we have to look to, is the provisions of the trust deed which give rise to the trust.
(p. 513) Thus, the law does not permit a look into anything other than the trust deed to decide whether the beneficiaries are known or their shares determinate.
8. It would, therefore, appear to us that recourse to the provisions of Section 83 is not possible for the purpose of detetmining the beneficiary or his share. It is true that the 1882 Act would apply and would govern the relations between the trustees, beneficiaries and the trust property. In many instruments a specific clause is recorded that the provisions of the 1882 Act would apply where the instrument is silent. That proposition can certainly be relied on; but to invoke that, it is necessary that the instrument should subsist. Section 83 is not a section to be applied when the instrument subsists. That section comes into play only where the trust itself fails or the trust objects are exhausted without exhausting the trust property. In the case before us, it will be a case of the failure of the trust if and when Section 83 is made applicable. So, the beneficiary located with the help of Section 83 is not a beneficiary given in the trust deed itself.
Therefore, it is not a beneficiary contemplated under Section 21(1).
9. Shri Doshi had referred to the decision of the Supreme Court in the case of CWT v. Trustees of H.E.H. Nizam's Family Trust  108 ITR 555. We are of opinion that the Supreme Court's decision would not be helpful on the issue before us. Section 21(1) is applicable in two situations. One is where there is only one beneficiary. The other is where there are more than one beneficiary. When there are more than one beneficiary, their shares should be determinate and not discretionary.
We may quote the Bombay tiigh Court decision in the case of B.P.Mahalaxmiwala v. CIT  26 ITR 177, it is observed : ...Therefore the proviso [to Section 41(1) of the 1922 Act] clearly contemplates two cases. One case is where the trust is in favour of one beneficiary and if the trustees do not receive the income specifically for that person, then the liability is that the tax shall be paid at the maximum rate. The other case contemplated is where the beneficiary is more than one person and in such a case if the trustees do not receive the income for the beneficiaries in specific shares, then also the liability is to be taxed at the maximum rate....(p. 180).
10. Now, the Supreme Court decision in the case of Trustees of H.E.H.Nizam's Family Trust (supra) considered the second type of cases, i.e., where there are more than one beneficiary. Since these beneficiairies' shares were subject to fluctuations owing to birth and death, the department took the view that their shares were indeterminate. The Supreme Court rejected the contention and held that one should consider the position on the valuation date only. The Supreme Court was not considering a case where the single beneficiary mentioned in the trust deed was an unknown person who would get a right in the property on the contingency of an event happening. In the reported decision it is observed : ...The Wealth-tax Officer has to determine who are the beneficiaries...on the relevant date and whether their shares are indeterminate or unknown. It is not at all relevant whether the beneficiaries may change in subsequent years before the date of distribution....(p. 598).
Thus, the Supreme Court decision is relevant where there are more than, one beneficiary who are identifiable on the valuation date but whose shares are liable for fluctuation at a later date.
11. If we were to apply the test given by the Supreme Court in the above para, we should ask ourselves who is the beneficiary. There is no clear answer to it. On the valuation date, there is none. It is not a case where on the valuation date there is a specific person but his share may be increased or decreased later. The Patna High Court was considering a similar situation in the case of Manager, Court of Wards v. CIT  140 ITR 78. Therein, on the death of one estate holder, the State Government took over the estate on escheat. Claiming to be an heir of the estate holder, one Sinha filed a suit against the Government and the High Court held that there could be no escheat. The appeal against the judgment of the High Court by the State Government was pending before the Supreme Court. On the question whether the assessment could be made on the manager, court of wards in relation to the estate and whether the assessment could be made at the maximum rate, the Patna High Court held that an assessment could be made on the manager, court of wards. They further held that in view of the litigation, it was difficult to foresee what would be the final decision and who would inherit the estate and in what proportion. The assessment at the maximum rate was, therefore, held to be valid. In our opinion, the facts of this case have some parallel with the case before us. In the reported case, the contingency was the decision of the Supreme Court. In the case before us, the contingency is the son of Bhagwatiprasad Jhunjhunwala not getting married. If in the case of Manager, Court of Wards (supra) the provisions of Section 41(1) of the Indian Income-tax Act, 1922, would be applicable, we do not see how the application of Section 21(1) can be resisted in this case.