Case: K.K. Handique Vs. The Member, Board of Agricultural Income-tax, Assam

1. These two appeals raise the question of construction of the relevant provisions of the Assam AgriculturalAct, 1939 (Act IX of 1939), hereinafter called the Act.2. One R. K. Handique executed in respect of his properties a deed of trust, dated January 8, 1941, whereunder he appointed four trustees, with an option toanother person as a trustee. He appointed his son, the appellant, as a Managing Trustee. The trustees had to administer the estate and realise the income and make disbursements in the manner prescribed in the trust deed. For the assessment years6, the Managing Trustee was assessed to agriculturalon the total income from the trust properties under S. 12 of the Act. The assessee, inter alia, contended that the assessment should have been made under S. 13 of the Act and not under S. 12 thereof. TheOfficer and, on revision, the Commissioner of Taxes, Assam, rejected his contention. At the instance of the assessee, the Member, Board of AgriculturalAssam, referred the following question to the High Court of Assam for its decision:"Whether the assessments for the years56 should have been made under S. 13 of the Assam AgriculturalAct."The High Court answered the question in the negative. Hence the appeals.

Reasoning: The document, so far read, leaves no room for doubt that the testator created a trust with the object of preserving the Tea Estates, vested the property in the trustees and directed only the income therefrom to be paid to the trustees as well as to his servants and to his grand daughters in the manner prescribed thereunder. All the elements of a trust are present in the document.The property, therefore, vested in theclause, if read literally, appears to be inconsistent with the properties being vested in the trustees. But in the context of the recitals in the entire document, it can only mean that so far as the sons were concerned the income will have to be paid not only to them but also to their legal heirs. Now does Cl. 20 detract from the document being a trust deed. It prohibited the beneficiaries from transferring their undivided shares in the trust property to any stranger when another beneficiary agreed to purchase the same for a reasonable price or from making a gift, mortgage or a lease of their shares to another person except another beneficiary. If literally understood, this clause would be bad in law; but, this clause could be reconciled with the rest of the document, if it was interpreted to mean that the alienation contemplated was in respect of the right to receive a share of the income. We are not concerned here as regards the validity of the document or any of its clauses, for no question was raised in that regard in the High Court or before theintention of the testator was made clear not only by the preamble but also by the express words used in Cl. (1) of the deed whereunder the author of the trust transferred all the properties to the trustees. That apart, the income of the properties was given not only to the trustees but also to others who were not trustees. Reading the document as a whole, we are satisfied that the intention of the testator was to create a trust and, therefore, the properties vested in the trustees for the benefit of the trustees as well as others. On this interpretation of the document, it is manifest that it cannot fall under S. 13, for the trustees cannot be described as common managers appointed under any law for the time being in force or under any agreement. They are obviously not receivers, administrators or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom. If S. 13 does not apply, they directly fall under S 12 (1), for they are holding the land partly for themselves and partly for the beneficiaries in terms of that clause.7. The High Court was, therefore, right in holding that the case fell under S. 12 and not under S. 13 of the Act. The answer given by the High Court to the question referred to it is correct.