# TRUST, BOMBAY v. THE C.l.T. BOMBAY

- **Citation:** [1973] 2 S.C.R. 1050
- **Court:** Supreme Court of India
- **Decided:** 1972-11-28
- **Case number:** Civil Appeals Nos. 2382c D E F G 2383 of 1969
- **Bench:** K. S. Hbgde, P. Jaganmohan Reddy, H. R. Khanna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/trust-bombay-v-the-c-l-t-bombay-5759
- **Pages:** 7

## Headnote

Wealth Tax Act, 1957, Ss. 3 and 5(1)(i)-Charging section not expressly mentioning association of persans as a chargeable entity-Trustees
of a "''" whether can be charged as individuals-Construction of deedTrust whether a charitable trust within meaning of S. 5(1) (i) of Act.
Four persons constituted on June 11, 1941 a Trust known as 'Gordhandas Govindram Family Trust'. In respect of the assessment years 1957-58
and 1958-59 the following two questions were referred to the High C-Ourt
under S. 27(1) of the Wealth Taix Act 1957; (a) Whether on a true
construction of the indenture of trust dated 11-6-1941 the trustees of the
Trust constitute an assessable unit under the provisions of the WealthTax Act; (b) Whether the property held by the trustees under the indenture of trust dated 11-6-1941 is held for any public purpose of a chari ·
table or religious nature in India within the meaning of Sec. 5(1) (iJ di
the Wealth-Tax Act? The High C-Ourt a.nswered both the questions
against the assessees. In appeal by certificate it was contended before this
court in respect of the first question that the charging section of the Act
did not expressly mentions 'association of persons' as a chargeable entity
and therefore the trustees could not be taxed.
HELD: (i) Section 21(1) as well as S. 5(l)(i) of the Act proceed
on the basis that 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 includes individuals as well,
unless the context otherwise indicates. In this case, the context, far from
not indicating that the individual does not include individuals, clearly
shows at any rate so far as the trustees are concerned that it includes individuals.
As the Indian Income-tax Act provides for the assessment of
'an association of persons' the context therein may indicate that individual
does not include individuals. But such an interpretation is not permissible
when we deal with Sec. 3 of"the Act.
Therefore joint trustees can .be
taxed as individual under the Act.
Accordingly, the trustees of the trust
in the present case constitute an assessable unit under the provisions of
the Act. [! 05 H EJ
B
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D
[
Commissioner of Income.tax, Madhya Pradesh and Bhopal v. Sodra
Devi, 32, I.T.R. -615 at 620 and V. Venugopa/a Ra\'i Val'ma Rajalr
v.
Union of India and Another, 74. l.T.R. 49, applied.
G
Subashini Karuri and
Another v. Wealth-tax Officer,
Calcutta and
Another, 45 I.T.R. 953 and Abhay L. Khatau and Others v. Commissioner
of Wealth-tax, Bombay City //, 57 LT.R. 202, approved.
Commissioner of Wea/th·tax, Bihar and Orissa v. Kripashankar Davashanker, Worah, 81 I.T.R. 763 referred to.
-
(ii) The trust in question wa.s created primarilv for the bonefit of
II
the members of the family of Gordhaadas Govindram Seksaria.
This
is_ clear from the title given to the Trust as well as from the various pro·
V1S1ons of the trust
deed.
Therefore it was not possible to
hold
that
.-
A
TRUSTBBS OF GORDHANDAS V. C.I.T, (Hegde, J.)
1051
the Trust in question is a Trust for any public purpose. It is clearly a
private Trust. [lOSS Fl
Trustees of Gordlranda.i Govindram Family Charity Trust v. C'!"'-
missioner of Income-tax (Central), Bombay, 21 I.T.R. 231 at 237 applied.
Trustees of t~ Charity F11nd v. Commissioner of Jncome--tax, Bombay, 36 I.T.R. 513 referred to.
B

## Text

1050
THE TRUSTEES OF GORDHANDAS GOVJNDRAM FAMILY
A
TRUST, BOMBAY
v.
THE C.l.T. BOMBAY
November 28, 1972
[K. S. HBGDE, P. JAGANMOHAN REDDY AND H. R. KHANNA, JJ.]
Wealth Tax Act, 1957, Ss. 3 and 5(1)(i)-Charging section not expressly mentioning association of persans as a chargeable entity-Trustees
of a "''" whether can be charged as individuals-Construction of deedTrust whether a charitable trust within meaning of S. 5(1) (i) of Act.
Four persons constituted on June 11, 1941 a Trust known as 'Gordhandas Govindram Family Trust'. In respect of the assessment years 1957-58
and 1958-59 the following two questions were referred to the High C-Ourt
under S. 27(1) of the Wealth Taix Act 1957; (a) Whether on a true
construction of the indenture of trust dated 11-6-1941 the trustees of the
Trust constitute an assessable unit under the provisions of the WealthTax Act; (b) Whether the property held by the trustees under the indenture of trust dated 11-6-1941 is held for any public purpose of a chari ·
table or religious nature in India within the meaning of Sec. 5(1) (iJ di
the Wealth-Tax Act? The High C-Ourt a.nswered both the questions
against the assessees. In appeal by certificate it was contended before this
court in respect of the first question that the charging section of the Act
did not expressly mentions 'association of persons' as a chargeable entity
and therefore the trustees could not be taxed.
HELD: (i) Section 21(1) as well as S. 5(l)(i) of the Act proceed
on the basis that 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 includes individuals as well,
unless the context otherwise indicates. In this case, the context, far from
not indicating that the individual does not include individuals, clearly
shows at any rate so far as the trustees are concerned that it includes individuals.
As the Indian Income-tax Act provides for the assessment of
'an association of persons' the context therein may indicate that individual
does not include individuals. But such an interpretation is not permissible
when we deal with Sec. 3 of"the Act.
Therefore joint trustees can .be
taxed as individual under the Act.
Accordingly, the trustees of the trust
in the present case constitute an assessable unit under the provisions of
the Act. [! 05 H EJ
B
c
D
[
Commissioner of Income.tax, Madhya Pradesh and Bhopal v. Sodra
Devi, 32, I.T.R. -615 at 620 and V. Venugopa/a Ra\'i Val'ma Rajalr
v.
Union of India and Another, 74. l.T.R. 49, applied.
G
Subashini Karuri and
Another v. Wealth-tax Officer,
Calcutta and
Another, 45 I.T.R. 953 and Abhay L. Khatau and Others v. Commissioner
of Wealth-tax, Bombay City //, 57 LT.R. 202, approved.
Commissioner of Wea/th·tax, Bihar and Orissa v. Kripashankar Davashanker, Worah, 81 I.T.R. 763 referred to.
-
(ii) The trust in question wa.s created primarilv for the bonefit of
II
the members of the family of Gordhaadas Govindram Seksaria.
This
is_ clear from the title given to the Trust as well as from the various pro·
V1S1ons of the trust
deed.
Therefore it was not possible to
hold
that
.-
A
TRUSTBBS OF GORDHANDAS V. C.I.T, (Hegde, J.)
1051
the Trust in question is a Trust for any public purpose. It is clearly a
private Trust. [lOSS Fl
Trustees of Gordlranda.i Govindram Family Charity Trust v. C'!"'-
missioner of Income-tax (Central), Bombay, 21 I.T.R. 231 at 237 applied.
Trustees of t~ Charity F11nd v. Commissioner of Jncome--tax, Bombay, 36 I.T.R. 513 referred to.
B
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2382c
D
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2383 of 1969.
Appeals by certificate from the iudgment and ordu dated
14th and 15th February 1968 of the Bombay High Court in
Wealth Tax Reference No. 1.
S. T. Desai, A. G. Menezes, I. B. Dadachlmji, 0. C, Mathur
and Ravinder Narain for the appellant.
T. A. Ramachandran, S. P. Nayar and R. N. Sachthey. for
the respondent.
Tht Judgment of the Court was delivered by
HEGDE, J.-These are appeals by certificate .. They arise from
a reference under s. 27(1) of the Wealth Tax Act, 1957 (To be
hereinafter referred to as the Act). Thest appeals relate to the
Wealth Tax assessment of the appellant -assessee for the assessment
years 1957-58 and 1958-59, the relevant valuation dates being
December 31, 1956 and December 31, 1957.
The two questions of law referred to the High Court are :-
" 1. Whether on a true construction of the indenture
of trust dated 11-6-1941 the trustees of the Trust constitute an assessable unit under the provisions of the
Wealth-tax Act?
I
2. Whether the property held by the trustees under
the indenture of trust dated 11-6-1941 is held for any
public purpose of a charitable or religious nature in
India within the meaning of Sec. 5 ( 1) (i) of the Wealthtax Act?"
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 constituted 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
1052
SUPREME COURT REPORTS
[1973] 2 S.C.R.
of help in the maDJler and to the extent hereinafter specified and
subjects to the conditions and directions stated in tho next following 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 followed by the
Trustees in the execution of the Trusts herein declared as follows :
"Poor Vaishaya Hind0os who are members of Seksaria 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 unmarried 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 subclause."
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 maintenance and marriage eigienses for the poor members of the Seharia family is b6und to take away a substantial part of the income
of the trust, if not the whole of it. -·
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A
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G
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TRUSTEES OF GORDHANDAS v. c.1.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 necessary 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 company 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 leviable upon and recoverable from the persons on whose
behalf the assets are held, and the provisions of this
Act shall apply accordingly."
It was urged that .unlike the charging section in the incometax Act, the charging. ~tion in the Act does not provide for thll
levy of tax on assoc1ahon of persons. It merely provides for
assessing an individual or Hindu undivided family or a company.
Trustees c~nnot be considered eithrr individual or as Hindu Un-
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 contention.
·
In Commissioner of Wealth-tax, Bihar and Orissa v. Kripasha!'lkar Dayashanker Worah,( 1) the contention raised was that
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
·"on behalf of" others. In law, a trusi.ees does not hold the trust
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 ithat 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
the trustees are concerned that it includes individuals. As the
Indian Income-tax Act provides for the assessment of "an association 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.
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, company and local authority and every firm and other association 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
Another,( 8 ) a question arose whether s. 3 of the Expenditure-tax
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
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TRUSTEES OF GORDHANDAS v. c.I.T. (Hegde, /.)
1055
A
"(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 expenditure-tax) at the rate or rates specified in the
B
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,
c the only entities which are mentioned, are inc!ividuals or HDidu
. undiVided family. This Court came to the conclusion that Mappilla Marumakkattayam Family could also be assessed
as
an
individ11al.
In Subashini Karuri and A11othtr v. Wealth-tax Officer, Caln
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, accordingE .ly, agrees with the High Court and hold that the trustees of the
trust, with which we are concerned in these appeals, constitute an
assessable unit under the provisions of the Act. '
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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, the trust in
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 Income-tax Act. After examining the
various provisions, the High Court opined that it was not a trust
(1) 46 I.T.R. 953.
(2) 57 l.T.R. 202.
(3) 21 IT.R. 231 at 237.
. 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.
(I) 36 IT.R. 513.
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