Chagla, C.J:—

This reference is concerned with a trust created by Mr. P.D Mahalaxmiwala on February 11, 1947. The trustees of the trust were assessed to the income they received for the assessment years 1948-1949, 1949-1950 and 1950-1951. The assessment was made upon the trustees at the maximum rate, and the question that arises is whether the first proviso to s. 41(1) is satisfied and the taxing department is entitled to tax the income in the hands of the trustees at the maximum rate.

Now, the provisions in the trust deed are that the trustees are to pay to the son of the settlor Minocher and his wife Mehra until the death of the survivor of them such portion of the income as may be necessary for their maintenance and they have to accumulate the balance of the income. After a period of eighteen years the accumulated income is to be divided equally between Sam and Aimai who are the son and daughter of Minocher and Mehra. Discretion is also given to the trustees to apply out of the corpus a sum of Rs. 10,000 for the marriage expenses of Aimai and a sum of Rs. 5,000 for the marriage expenses of Sam, and they have also been given the discretion to pay out of the corpus or the accumulated income any amount necessary for the higher education of Sam or Aimai or for any extraordinary expenditure such as illness of Minocher or Mehra or of their children Sam or Aimai, and the deed provides that after the death of the survivor of Minocher and Mehra the trust premises and such accumulated income as the trustees may have shall be equally divided between Sam and Aimai for their absolute use and benefit.

Turning to the proviso in question, the main s. 41(1) makes the income of a beneficiary taxable in the hands of the trustee to the same amount and in the like manner as the beneficiary himself have been taxed. But the first proviso imposes a heavier liability upon the income received form a trust under the circumstances mentioned in that proviso, and the circumstances are that if the income is not specifically receivable on behalf of any one person, or where the individual shares of the person on whose behalf they are receivable are indeterminate or unknown, then the tax shall be levied and recoverable at the maximum rate. Therefore the proviso 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 beneficiary in specific shares, then also the liability is to be taxed at the maximum rate. Therefore the scheme of the proviso is clear that if there is one beneficiary no question of share arises and the income must be received specifically on behalf of that individual. But where there are more than one beneficiary, then the question of their shares arises and those shares must be determined and known. It is equally clear from this point of view that the word “or” used in this proviso is disjunctive and not conjunctive. It could not possibly be conjunctive because the word “or” connects two different positions altogether, both of which could not possibly arise at the same time. A trust would either be for the benefit of one beneficiary or it would be for the benefit of more than one beneficiary, and as the proviso contemplates both the cases and deals with both the cases, the word “or” is obviously disjunctive and not conjunctive, and therefore in order that the department should be entitled to levy tax at the maximum rate they have to satisfy the condition laid down in the proviso depending upon which particular circumstance arises. If the case is of one beneficiary, they must satisfy the condition laid down in the first part of the proviso; if the case is of more than one beneficiary then the department must satisfy the condition laid down in the second part of the proviso.

Now, in this particular case it is clear that the beneficiaries are more than one. The beneficiaries are the son and his wife and the two children of Minocher. Therefore no question can possibly arise on the first part of the proviso, and what we must consider is whether the second part of the proviso is satisfied, and that is whether the shares of the beneficiaries are determined and known. It is obvious even on a casual consideration of the trust deed that the shares of the beneficiaries are not determined and known. It is left to the discretion of the trustees to give such part of the income to Minocher and his wife Mehra for their maintenance and to accumulate such part of the income as they think proper for the benefit of Sam and Aimai. Indeed, Mr. Palkhiwala has not attempted to contend that the second part of the proviso has not been satisfied, but his contention is that on a true construction of the first proviso to s. 41(1) “or” must be read as “and” and according to him the scheme of the proviso is that the taxing department is entitled to tax at the maximum rate only when the beneficiary is not a named beneficiary and the shares are not determined. In our opinion it is not possible to place the construction suggested by Mr. Palkhivala upon the first proviso. In the first place, the Legislature has clearly distinguished between “any one person” in the first part of the proviso and “persons” in the second part of the proviso. If the intention of the Legislature was that “person” should be understood in the sense in which it is defined in the General Clauses Act as to include the plural, then it was not necessary to emphasise the singleness of the person by using the word “one”, and the distinction is further emphasised by using the singular in the first part of the proviso and the plural in the second part. We cannot possibly read the expression “any one person” to mean “any named person”.

Mr. Palkhivala, however, receives some support in the contention he has put forward by a decision of this Court on which he very strongly relies, and that is a decision in Yakub Versey Laljee v. Commissioner of Income Tax.(3) In that case the opinion was expressed both by the learned Chief Justice Stone and Mr. Justice Kania that in the first proviso to s. 41(1) the word “or” must be read as equivalent to “and”. Now, it is necessary to look at the manner in which the point came before this Bench and how it was ultimately decided. It appears from the report of the decision at page 549 that the tribunal took the view that the abovementioned provision, viz. the first proviso, lays down that unless both these conditions are fulfilled, viz. (i) specifically receivable on behalf of any one person, and (ii) the individual shares of the persons on whose behalf they are receivable are determinate or known, the tax on the income shall be levied at the maximum rate. The Tribunal therefore wrongly cast the burden upon the assessee to satisfy both the conditions. They then found that in the trust they were considering the shares of the beneficiaries in the trust income were neither indeterminate nor unknown within the meaning of the first proviso to s. 41(1) Then they go on to say:

“The second condition, however, that the income should be specifically receivable on behalf of any one person, is not in our opinion fulfilled.”

When the case came before the Court on a reference, the Commissioner was not particularly interested in pressing before the Court the construction that “or” must be read as “or” and not as “and” because on the facts of that case even if the other construction were to prevail the assessee was bound to fail. In fact, the assessee did fail before the Court. At page 552 Sir Leonard Stone, Chief Justice, says:

“In the first place in spite of the use of the word ‘or’ in that proviso it is my opinion that ‘or’ in this context must be read conjunctively. There can be no point in having the two alternatives unless read as conjunctive ancillary to income, profits or gains not being specifically receivable on behalf of any one person.”

With very great respect, the two alternatives are essential and they have been put in the proviso for the reasons that we have already pointed out. Further on the learned Chief Justice says:

“So that it has to be determined not only what is the quantum of the share but also who is the beneficiary who is entitled to it, and the test must in my opinion be whether both the shares and the beneficiaries who are to take the same are not indefinite or unknown.”

The test really is to be applied according to whether there is one beneficiary or more than one beneficiary and the test in the two cases must be different and the two different tests are laid down in the first proviso. Turning to the judgment of Mr. Justice Kania, again, with very great respect, the learned Judge has disposed of this argument in one sentence and this is what the learned Judge says:

“I agree that in the proviso the word ‘or’ has the meaning of “and”, otherwise the two parts would be meaningless.”

But earlier in his judgment when he rightly construes the first proviso, this is what he says:

“Having regard to the facts found on the construction of the clause it is clear that within the meaning of s. 41, proviso (1), in the accounting year the income cannot be predicted to belong to a particular individual, or if more than one with their determinate specific individual shares.”

This is, with respect, the correct interpretation of the first proviso. If the income cannot be predicted to belong to a particular individual, the first proviso is satisfied because we are dealing only with a case of a particular individual, or, as the learned Judge again rightly points out, if the beneficiary is more than one then we are concerned with the determinate specific and individual shares and if these shares are not specific or determinate then again the proviso is satisfied. Mr. Palkhivala has from his point of view quite correctly pressed upon us the necessity of following this judgment and not differing from it. Indeed, it being a judgment of a Bench of co-ordinate jurisdiction, if we felt it was binding upon us whatever our own view might have been, we would have followed it. But in this particular case there are certain considerations which free us from the obligation of following that judgment, apart from our own view, with respect, that the decision was not a correct decision. It is clear from the way the two judgments are delivered that this point was not fully considered or argued before the learned Bench. As we pointed out before, in either view of the case the assessee was likely to fail and the Commissioner was not concerned to invite the Court to consider the implications of the interpretation put by the Bench.

Apart from that we find there is another judgment, also of a Division Bench, which has taken a contrary view, and that is the judgment in Ranchhoddas v. Mehta v. Commr. I.T Bombay(4). In that case we were considering a will of Ranchhoddas v. Mehta and by a particular clause in that will the testator provided that out of the income of the residue of his estate his trustees should pay to his wife Kokila for her maintenance and for the maintenance and other expenses of her children such sums as she may from time to time require. In the accounting year the trustees paid a certain sum to Kokila for her maintenance and the maintenance of her sons, and the question was whether this sum was liable to tax in the hands of the trustees at the maximum rate. The judgment then sets out the proviso and we came to the conclusion that as far as the amount was concerned it was clear that the share of Kokila in the residue of the income was not determined and that being so the trustees could not receive and did not receive any determinate share on her behalf from the residue of the estate. With regard to the balance of the income the position was that the balance was distributable when the younger son attained majority and the shares which the beneficiaries would get at that period was indeterminate because it would depend upon whether Kokila suvived the period of distribution or not. We therefore held that with regard to the balance also as it could not be stated as to what specific shares any of the three beneficiaries would get, the proviso applied. Therefore in that particular case we applied the first part of the proviso with regard to one set of circumstances where only one beneficiary was involved and the second part of the proviso with regard to a set of circumstances where more than one beneficiary was involved. It was never suggested that before the taxing department could succeed both the conditions laid down in the proviso must be satisfied. It is true that our attention was not drawn to the earlier decision, nor were we expressly called upon to consider whether “or” meant “or” or “and”. But the decision clearly proceeds on the basis that “or” is disjunctive and not conjunctive as held by the earlier decision.

In our opinion, therefore, the taxing department having satisfied the condition that in this case there is more than one beneficiary and the shares of these beneficiaries are not receivable by the trustees in specific or determinate shares, the proviso applies and the taxing department is entitled to levy tax at the maximum rate.

Mr. Palkhivala drew our attention to a resolution passed by the trustees by which they decided to pay the whole of the income for the next seven years to the son Minocher and his wife, and Mr. Palkhivala says that this shows that whatever the provision of the trust deed may be, by a resolution passed by the trustees they have decided to allocate the income in specific shares to the beneficiaries. Now, we do not read the resolution as in any way altering the provision in the trust deed. The trust deed gives the discretion to the trustees to utilise the income in the manner they think proper. A resolution by the trustees themselves to limit their discretion or to regulate their discretion cannot possibly take the case out of the proviso. Mr. Palkhivala also wanted to rely on an order passed by Mr. Justice Coyajee on April 18, 1952 by which he ordered the trustees to pay the beneficiaries, viz. Minocher and Mehra, equally, the full income from the trust. Now, this order was passed after the relevant assessment years and we will express no opinion on the effect that this order might have upon the question as to whether the case has been taken out of the proviso. In our opinion, therefore, the tribunal was right in the view that it took as to the liability of the trustees to pay tax at the maximum rate.

But before we part with this reference, we should like to observe that this is a very hard case which certainly deserves the sympathetic and humane consideration of the taxing authority. The whole income of the trust is Rs. 4,200 and we are told by Mr. Palkhivala that Minocher, the son of the settlor, is a retired gentleman who has hardly any income and who has to depend on what he gets from the trust for his bare maintenance. If a large part of this income is taken away by the taxing authority, it would cause great hardship to Minocher and his wife and their children. It is true that the taxing department must collect tax as the law requires, but the taxing department has considerable power given to it in proper cases to relieve the distress that might be caused in any particular case by the tax becoming inequitable. The whole object of the proviso is that when the income of a beneficiary cannot be determined in specific share, it is difficult for the taxing department to find out at what rate the beneficiary's income should be taxed. That is on the assumption that the beneficiary has an independent income of his own, but if the taxing department is satisfied that in this case the beneficiary has hardly any income, so that the question of the rate as far as he is concerned would be purely academic, the taxing department might well consider whether they should not treat this case sympathetically.

The answer we must give to the question is in the affirmative. Assessee to pay the costs.

Attorneys for applicant: Jehangir, Gulabbhai & Billimoria.

Attorney for respondent: N.K Petigara.

Answer accordingly.

P.M.P