COMMISSIONER OF WEALTH-TAX, CALCUTTA versus O.M.M. KINNISON (DEAD) THROUGH HER EXECUTORS & TRUSTEES

Citation: [1986] 3 S.C.R. 674 · Decided: 29-08-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
fl 
COMMISSIONER OF WEALTH-TAX. CALCUTTA 
v. 
0.M.M. KINNISON (DEAD) THROUGH HER EXECUTORS 
& TRUSTEES 
AUGUST 29, 1986 
[R.S. PATHAK AND SABYASACHI MUKHARJI, JJ.J 
Wealth Tax Act, 1957: s. 6, cl. (i)-Asset-A right in the nature of 
a chose-in-action enforceable in England-Whether liable to wealth tax. 
'A', a company, the managing agents of two Indian companies 
entered into a sub-partnership with one 'B' in 1907 and shared equally 
the emoluments from the managing agency. 'B' died in 1916 leaving a 
Will be';ueathing all his property to his wife 'C'. 'C' executed two deeds 
of assignment in 1927 assigning her share of the emoluments under the 
sub-partnership in favour of her son 'D', who beg~n to receive the half 
share of the emoluments from the managing agency. 'D' executed a Will 
in 1935 appointing his wife and a solicitor as executors and trustees 
upon trust of his real and personal estate. 'D' who was domiciled in 
England died in 1943. The High Court in England granted probate of 
the Will in June, 1943. Letters of Administration were obtained in 
India in August, 1944. The widow of 'D' was a non-resident and not a 
citizen of India. 
The Will inter alia empowered the two trustees to sell, call in and 
convert into money such parts of the estate as may not consist of money, 
at such time and in such manner as they thought fit, postponing such 
sale and conversion for such period as they thought proper. They were 
enjoined aller meeting the funeral and testamentary expenses, and de-
bts and legacies to invest the residue of the ready monies arising from 
such calling in and conversion of the estate, with the consent of the 
assessee during her life and atlerwards at the discretion of the trustees, 
in the investments authorised under the Will and to transpose with 
investments into others, and to stand possessed of the residue of such 
monies and all investments and the income thereof upon trust subject to 
the further powers and provisions declared under the Will. It was pro-
vided that the trustees would pay the income of the residuary trust fund 
to the assessee during her life. After the death of the assessee the 
trustees would stand possessed of the residuary trust fund in trust for 
674 
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C.W.T. v. O.M.M. KINNISON (PATHAK, J.) 
675 
the benefit of the testator's children .in accordance with the further 
provisions of the Will. 
The corpus of the trust consisted of certain share$ in an Indian 
company and the income from the managing agency of the Indian com-
panies. The question that arose was whether the widow of 'D' was liable 
to wealth tax on her interest in the Indian assets in the hands of the 
trustees. The Wealth Tax Officer assessed her to tax for the assessment 
years i957-58 to 1962-63. 
The appeals filed against the assessments were dismissed by <he 
Appellate Assistant Commissioner, who held that the assessee possessed 
rights and interest in the shares and the managing agency which were· 
tangible moveable properties located in India and, therefore, subject to 
wealth tax under the Act. 
In appeals before the Appellate Tribunal it was contended by the 
assessee that the assets held by her were situated outside India and 
'\being a non-resident she was not taxable thereon. Alternatively it was 
urged that she was entitled to exemption under sub-cl. (iv) of cl. (e) uf s. 
2 of the Wealth Tax Act. The Tribunal held that the assessee who has a 
life interest in the testamentary trust estate comprising inter alia of the 
shares in an Indian Company and commission from the managing 
agency of an Indian Company c~n be said to have an interest in such 
shares and commission and that such interest is property located in 
India so as to be taxable under the Wealth Tax Act. It further held that 
the life interest of the assesee in the testamentary trust estate is not an 
annuity which is exempt under s. 2(e)(iv) of the Wealth Tax Act. 
,L. · 
The matter was referred to the High Court at the instance of the 
· 
assessee. It took the view that the right which the assessee acquired 
under the trust was a right to have the trust administered in accordance 
with the provisions of the Will. While the legal ownership of the trust 
properties including the shares and the managing agency, vested in the 
• 
trustees and remained so vested, the beneficial interest of the assessee 
did not extend to any right in any of the trust properties in specie and 
did n

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