Patna High Court
Dr. P.K. Banerjee vs Controller Of Estate Duty on 20 February, 1987
Equivalent citations: [1987]165ITR664(PATNA)
Author: Bishwanath Agrawal
Bench: Bishwanath Agrawal
JUDGMENT Uday Sinha, J.
1. This is a reference under Section 64(1) of the Estate Duty Act, 1953. The question referred to us for our opinion is :
" Whether, on the facts and in the circumstances of the case and on a true construction of the trust deed dated March 21, 1958, the trust properties in question are legally includible in the taxable estate of the deceased ? "
2. The deceased, Dr. T. N. Banerjee, died on July 28, 1966. He was possessed of some properties in the towns of Munger and Patna. In regard to some of them, he created a trust and executed a deed of trust dated March 21, 1958. The accountable person was Dr. P. K. Banerjee, son of the creator of the trust, Dr. T. N. Banerjee. The beneficiaries of the trust were (1) sons and daughters of the son of the creator of the trust--Dr. Prasun Kumar Banerjee, (2) sons and daughter of Basanta Kumar Banerjee and Hemanta Kumar Banerjee--nephews of the settlor--Dr. T. N. Banerjee, and (3) sons and daughters of Aditya Nath Banerjee--youngest brother of the settlor. The trustees were (1) Dr. T. N. Banerjee, (2) Dr. P. K. Banerjee, (3) Basanta Kumar Banerjee, (4) Hemanta Kumar Banerjee, and (5) Achalendra Nath Mukherjee, In terms of the deed of trust, the settlor was the first chairman of the board of trustees. The purpose and object of the trust was to make provision for the education, marriage and such other special provisions as the trustees may decide necessary for the benefit of the beneficiaries.
3. For deciding the question referred to us, the crucial clauses are Clauses 6, 8 and 10. They read as follows :
" 6. Duties of the trust.--That the trustees shall by themselves or through an agent or agents employed by them manage and deal with the trust properties in such manner as might be beneficial to the interest of the trust and shall realise the rent, dividend, interest and other income, etc., accruing from the trust properties noted in the Schedules hereinafter and the settlor shall make such formal endorsements and execute such documents, bring or defend suits and do every such thing as may be legally necessary to enable the trustees to realise such income and to properly manage the trust estate. The chairman of the board of trustees shall represent the board of trustees and shall have full powers to deal with the properties and do all things as may be legally necessary for the benefit of the trust, either in the way of realisation of the income of the trust or to properly manage the trust estate or, if necessary, to bring or to defend suits or criminal cases and all acts done by the chairman of the board of trustees in the due exercise of his powers and duties as chairman of the board of trustees shall be binding upon the trustees and trust estate.
8. The settlor shall be the first chairman of the board of trustees. The chairman shall have full powers of management of the trust estate. He shall, however, act in consultation with the others of the board of trustees, and in the matter of difference of opinion between the trustees, the decision of the chairman of the board of trustees shall be final and operative. The chairman shall nominate his succeeding chairman. If the nominee happens to be an outsider, he shall be co-opted as a member of the board of trustees. The last surviving trustees shall nominate any one to act as the trustee.
10. That the trustees, if they so desire, can reside in any portion of the building which are the items of properties of the trust estate free of any payment of rent, with the approval of the chairman of the board of trustees. The chairman of the board of trustees shall, however, not accord approval before the houses mentioned in Schedule A or B are completely constructed and before the loans, if any, raised for the construction and completion of the houses have been fully paid up."
4. From these paragraphs, we have to ascertain and decide whether Dr. T. N. Banerjee had the right of residence in the properties mentioned in schedules A, B and C of the trust deed. Counsel for the parties are ad idem that if the deceased had the right of residence in the trust properties, his right of residence would be in the properties passing on the death of the deceased. We have, therefore, to see whether the deceased had the right of residence in the trust properties ?
5. Mr. K. N. Jain, learned counsel for the assessee, submitted that the deceased as chairman did not reserve to himself any right of residence in the trust properties. He placed reliance upon clause 10 of the deed and contended that it only empowered the right of residence on the trustees, but not on the chairman and, therefore, Dr. T. N. Banerjee, the chairman, had no right of residence. This submission is fallacious. The deceased was himself one of the trustees. Clause 10 conferred the right on all the trustees to reside in the trust properties. Therefore, Dr. T. N. Banerjee also had the right to reside in them. It is another matter that nothing is mentioned about the chairman of the board and whether he was not specifically clothed with that right. But the chairman was none else than one of the trustees. Dr. T. N. Banerjee filled two characters--one as trustee and another as chairman of the board of trustees. He was chairman only by virtue of being a trustee. Therefore, all the rights of the trustees were vested in him. In that view of the matter, there is no escape from the position that the deceased had the right of residence in the trust properties. The Revenue authorities were not concerned with the chairman or trustee. They were concerned with the deceased, Dr. T. N. Banerjee, as trustee. He had the right to reside. Therefore, that right could not be taken away by non-mention of the fact that the chairman also would have the right of residence. In that view of the matter, I have not the slightest doubt that the trust properties to the extent of the share of the deceased was legally includible in the estate of the deceased.
6. For the reasons stated above, the question referred to us is answered in the affirmative, in favour of the Revenue and against the assessee. There shall, however, be no order as to costs.
7. Let a copy of the judgment be transmitted to the Assistant Registrar, Income-tax Appellate Tribunal, in terms of Section 64(6) of the Estate Duty Act, 1953.
B.N. Agrawal, J.
8. I agree.