CONTROLLER OF ESTATE DUTY, WEST BENGAL versus USHA KUMAR & ORS.

Citation: [1980] 2 S.C.R. 241 · Decided: 20-11-1979 · Supreme Court of India · Bench: V.D. TULZAPURKAR · Disposal: Case Partly allowed

Judgment (excerpt)

241 
CONTROLLER OF ESTATE DUTY, WEST BENGAL 
v. 
USHA KUMAR & ORS. 
November 20, 1979 
[V. D. TuLZAPURKAR AND E. S. VENUTARAM!AH, JJ.] 
EsloJ• Duty Act 1953, S5-Estat• Duty-Trust deed providing. property to 
belong to· and remain with trust-Income from trast property-1ttilization for 
_ r~ligious, charitable purposa and benefit of desc.endants of sett/or-Whether valid 
·tF<lst-wlrether property devolved 011 scttloTs son and passed on his deat11-
TI! 
liability to estate duty. 
' 
.,j. 
One 'W' executed a deed of trwt, transferred all his properties to the sllid 
' I 
trust and appointed himself as the first managing trustee for a period of one 
year and directed that after be ceased to be the trustee, bis son the deceased 
should act as the managing trustee of the Trust Mld on his death, the deed 
directed that his sons, grand-sons etc. should be appointed as trustees. The deed 
provided that the properties should ·belong to the trusl and continue to remain 
with the trust and that none of the heirs of the author of the trust could have 
, 
t 
the power to deal with them as their own or to alienate them. The trust deed 
provided that out of the income from the trust properties in any year, one-fourth 
thereof should be utilized for the payment of taxes, expenses of the repairs,, 
alterations, reccnstructions etc. of the trust properties. Ono-half of the balance, 
i.e. one-half of three-fourths of the income should be apent for the sevas of the 
family deities, performance of certain specified pujas, sradhas and certain other 
religious purposes. The remaining income i.e. three~eights of the total income 
w .. permitted to be used by the trustees and other members of the family. 
After the death of the author of the trust, his son. the deceased, became 
tho trustee. 
On his death, the question whether the properties which were the 
subject matter of the trust should be included in the estate passing on his death. 
arose for consideration in the. estate duty proceedings. 
The accountable persons contended before the assessing authority, the Deputy 
Controller of fatale Duty, that no estate duty was payable in respect of tho 
properties comprised in the inist, as the said propertiesi didl not pass on the> d::ath 
of the deceased. The Deputy Controller held that the provisions of tho- ll1l$t 
were such as to keep the properties tied up in perpetuity without any power of 
alienation and &ince the purpose for which the trust was created was not a. public 
or charitable one, the trust ils a whole was void, and held that the properties 
passed on the death of tho deceased under section 5 of the Act. 
In appeal, the Central Board of Revenue held that even though the purpo&o 
of the trust was said to be for cerrain religious purposes, the further directions 
contained in the deed providing for certain persoual expenses of the author of 
tho trust, his heirs to succeed him as trustees, and stipulating that the trustees 
WllfC not competent to alienate the trust properties led to the inference that the 
inteotion of the author executing the deed of the ,trust was "not only to provide 
for tho worship of deities but also for mooting tho secular expenses of the family 
-- --- ._ ..... ,...,, .......... 
A 
B 
c 
D 
E 
F 
G 
H 
242 
SUPREME COURT REPORTS 
(1980] 2 S.C.R. 
A 
members and future heirs" and since the trust offended the rule against perpetui-
ties it was void in law and all the properties comprised in the said trust shnuk\. 
be held to pass under section 5 of the Act. 
B 
c 
D 
E 
F 
G 
H 
The High Court in the reference under oection 64(1) of the Act at the· 
imtance of the accountable persons, held that the properties comprised in the dwl 
which created a Hindu religions trust could not I><> included in the estate of tile 
deceased as properties passing on his death. 
In the appeal to this court on the question wheth.,.- all or any part of tho-
propertie• which were tho •nbjcct ·matter of the trust could be treated ao p...aing 
on the death of tho deceaoed tor pW1JO'CO of levy of e\lato duty under the Estate 
Duty Act, 1953. 
. . 
~- _,. 
HELD : 1. Only one-halt of the propertieo which were the subject matter o~ 
. \ 
the trust deed pas•ed on the death of the deeeaoed under sectio11 S of the Acl 
.\.
and tho remaining one-half did noL 
(248 DJ 
2. The High Court was in error in holding that tlio whole of the trust pro-
perties constituted a religious endowment and did not pass on the death of th<:r 
deceased. 
(248 C

Excerpt shown. Read the full judgment & AI analysis in Lexace.