Commissioner of Wealth Tax vs V. Ranganatham Chetty

The Tribunal has rightly taken note of the supplementary deed, by which the right given to the assessee by the earlier deed was modified and

right of the assessee in the property in door No. 15, Govindappa Naicken Street, George Town, Madras, was confined to the first floor of the

building. The Tribunal as also the CWT have disagreed with the view of the Income Tax Officer that notwithstanding the supplementary deed the

entire property should be assessed in the hands of the assessee. In our view, the Income Tax Officer was in error in ignoring the supplementary

deed, the genuineness of which is not in question.

We do not find any error in the view of the Tribunal that full effect be given to the deeds in terms of which the assessee acquired the right to

enjoy the property and extent to which he was permitted to enjoy the property. The Tribunal and the CWT have also taken note of the fact that the

income from the ground floor of the building was being assessed in the hands of the trust named after the same settlor, who had created the trust in

respect of the first floor. That trust has its own trustees.

The questions referred to us, both under the Wealth Tax Act and Income Tax Act, viz.,

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law and had valid materials to hold that only the life interest

attributable to the first floor of the property at 15, Govindappa Naicken Street, Madras, can alone be considered in the hands of the assessee, as

wealth for the purpose of wealth-tax assessment?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law and had valid materials to hold that it is only the income

concerning the first floor of the property at 15, Govindappa Naicken Street, can alone be considered in the hands of the assessee for the purpose

of income tax?

are required to be and are answered against the revenue and in favour of the assessee. The third question, viz.,

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law and had valid materials to hold, especially when the

assessee is the sole surviving trustee, endowed with all rights over the properties of the trust, had limited interest, to be confined only to the floor of

the property?

wrongly assumes that sole surviving trustee can act contrary to the terms of the deed by which his interest in the trust property is limited. The

power of the trustee is derived from and is limited to what has been conferred by the document by which the trust has been created. All

amendments or modifications made thereto by the settlor, which are otherwise legally valid, are binding on the trustee. By the supplementary trust

deed, as already noticed the right given to the assessee in this property was confined to the first floor, and it is only to that extent the assessee can

be said to have a right in that property. After ignoring the wrong assumption the question, that question is also answered in favour of the assessee.

This is an instance of stubborn pursuit of a matter which did not warrant such effort, nor did the amount of revenue involved justify such pursuit

of the matter to this Court.

It is disappointing to note that the revenue, all too often persists in carrying to this Court, matters which are relatively minor as also other matters

which do not warrant the same being brought to this Court, in the light of what the CWT who is a senior officer of the department would have

stated after proper examination of the case and the affirmation of that view by the Tribunal after a thorough independent review. Adequate

attention is not being paid by the revenue to screen the decisions of the Tribunal and to bring before the High Court only matters of real substance.

Over 95 per cent of the references to this court are at the instance of the revenue and only a small proportion of those references result in answers

to the question referred being recorded in favour of the revenue.

All the questions referred are answered against the revenue and in favour of the assessee. The assessee shall be entitled to cost of Rs. 1,000 in

respect of each tax case.