LexCOMMISSIONER OF WEALTH TAX, RAJASTHAN versus IIER HIGHNESS MAHARANI GAYATRI DEVI OF JAIPUR
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A c D E F G H 707 COMMISSIONER OF WEALTH l'AX, RAJASTHAN II, IIER HIGHNESS MAHARANI GAYATRI DEVI OF JAIPUR September 14, 1971 [K. s. HEGDE AND A. N. GROVER, )J.) Wealth Tax 11ct (21 of 1957), s. 2(e) (iv)-Assessee entitled to half !Jiu.re of inco1ne of trust fund-Trust fund capable of being aug111ented-c- lf assessee entitled to annuity- or interest in property assessable to wealth· tax. The trust deed executed by the husband of the respondent-asscssee provided that the tn:stees should pay to the a"cssee during her life time 50 per cent of the income Of the trust fund. cfhe settlement \\/flS ifrcvQ.o cable and the properties mentioned in the schedule to the trust rleed stood transferred to the_ name of the trustees. Under the clauses of the deed the trust fund was not a fixed sum but was capable of being augmented, On the question whether the assessee was entitled only to an annuity within the meaning df that expression in s. 2(e)(iv) of the Wealth Tax Act or had an interest in the corpus of the trust which coi1ld be brought to tax und~r the Wealth-tax Act. · HELD : The intention of the husband was that the assessee should get 15/30 share from out of the income of the trust fund. Since neither the ·trust fund nor the amount payable to the assessee was a fixed SUQl, what the assessee -.va3 entitled to was ,hot an annuity but an allquot share in the income of the trust fund. The fact that in the particular assessment year there was no change in the .trust fund was irrelevant because the question whether a particular income. is an annuity or not does not depend upon the amount received in a particular year. [712 D-H] Hence the assessee had a life interest in the trust fund which could be brought to tax under the Wealth-tax Act. [713 A-BJ Ahmed G. H. Ariff & Ors. v. Commissioner of Wealth-tax, 1.6 l,T_R. 471 and Commissioner of Wealth-tax, Gujarat Arundhati Balkrislma, 71 l.T.R. 505, followed. . CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2149 of 1968. Appeal from the judgm~nt and order dated January 3, 1967 of the Rajasthan High Court in D. B. Wealth Tax Reference No. 6 of 1963. ' · S. Mitra, 0. P. Malhotra, R. N. Sachthe.v and B. D. Sharma, for the appellant. M. C. Setalvad, H. f'. Gupta and B. R. Agarwala, for the respondent. The Judgment of the Court has delivered by Hcgde, J. This appeal by certificate arises out of the wealth- tax assessment of the assessee-respondent, an· individual, for the ,·ear 1959-60, the corresponding valuation date being March 'io s SUPREME CoURT REPORTS [1972] 1 S.C.R. 31, 1959. The assessee is the wife of Maharaja of Jaipur. On September 9, 1953, the Maharaja made a settlement at Lbndon. Under the deed of settlement, he appointed Sir Harold Augustus Warner as the trustee of the property detailed in the deed of settlement. The settlement is an irrevocable one and the pro- perties mentioned in the schedule to the trust deed stood trans- ferred to the name of the trustee. The trust deed provides that the trustee should pay to the assesss:e during her life time 50 per cent of the income of the trust fund. The question arose whether the assessee can be held to have any sbare in the corpus of the trust and whether the same can be brought to tax under the pro- visions of the Wealth Tax Act, 1957 (to be hereinafter referred to as the Act). The Wealth-tax Officer came to the conclusion that the assessee's interest in U.K. Trust amountil)g to Rs. 15,75,694/- plus the income-tax reserve thereon Rs. 1,75,401/- have to be included in the assessee's total wealth. This decision was confirmed by the Appellate Assistant Commissioner in ap- peal. Thereafter the assessee took up the matter in second appeal to the Income-tax Appellate Tribunal. The Tribunal for reasons set out in paragraphs 6 to 10, 12 and 13 of its order held that the assessee did not get any life interest in the corpus but it held that her interest was an interest whicb was an asset under the Act, but for s. 2(e)(iv) of the Act. In other words, it held that the assessee had only a right to get annuity from out of the trust fund ,and as such her right is exempt from wealth tax in view of s. 2(e) (iv) of the Act. In the view it took, the Tribunal considered that it was not necessary to ascertain the proper and correct method cif valuation of the assessee's right. It directed that if and when its conclusion on the interpretation of the clauses were set
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