TRUSTEES OF H.E.H. NIZAM'S PILGRIMAGE MONEY TRUST, HYDERABAD versus COLLECTOR OF ESTATE DUTY, HYDERABAD

Citation: [1998] 3 S.C.R. 827 · Decided: 21-07-1998 · Supreme Court of India · Bench: SUJATA V. MANOHAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

TRUSTEES OF H.E.H. NIZAM'S PILGRIMAGE 
MONEY TRUST, HYDERABAD 
v. 
COLLECTOR OF EST A TE DUTY, HYDERABAD 
JULY 21,1998 
[SUJATA V. MANOHAR AND K. VENKATASWAMI, JJ.] 
Estate Duty Act, 1953 : 
A 
B 
Section 12(1) and Explanation-Property on Sett/or's death-Deemed C 
passing of-Applicability-Trust created for certain charitable and religious 
purposes-Property transferred absolutely to the trustees-However, trustees 
were directed during the lifetime of the sett/or to defray the expenses of Ha) 
of stellar and his family members accompanying him on pilgrimage to various 
shrines and holy places-Sett/or also had the right to direct the expenditure 
on religious and charitable purposes from the trust fund-Held: Under these D 
circumstances, no interest retained by the stellar for life in the trust property-
Hence, S. I 2 (I) not applicable. 
Section JO-Property on sett/or's death- Diem.e.d passing of -
Applicability-Trust created for certain charitable and religious purposes- E 
Trustees were directed, during lifetime of the sett/or, to defray ·the expenses 
of Ha) of sett/or and his family members accompanying him on pilgrimage to 
various shrines and holy places-Held: Under these circumstances, S JO not 
applicable- This is more so since, in fact, the sett/or received no benefit from 
the trust. 
F 
The Nizam of the erstwhile State of Hyderabad created a Trust under 
which the settlor set apart Government securities yielding an annual income 
for certain religious purposes. Under the settlement, the said property was 
transferred absolutely to the trustees. However, under a Clause of the 
settlement, the trustees were directed, during the lifetime of the settlor, to G 
defray the expenses ofHaj of the settlor and all such members of his family 
who might accompany him on pilgrimages to various Mohammedan Shrines 
and holy places and for making religious offerings and expenditure money 
for charitable purposes. The said clause also provided for expending income 
as well as part of the corpus of the trust fund for religious and charitable 
purposes as the settlor might direct. 
H 
827 
828 
SUPREME COURT REPORTS 
[1998] 3 S.C.R. 
A 
On the death of the settlor the Assistant Controller of Estate Duty held 
that the Trust property was liable to be included in the estate to the deceased 
for estate duty under Section 10 of the Estate Duty Act, 1953. The Appellate 
Controller of Estate Duty dismissed the appeal. The Tribunal held that the 
property was includible in the estate of the deceased under Section 12 of the 
B 
Act also. The High Court upheld the view of the Tribunal. Hence this appeal. 
Allowing the appeal, this Court 
HELD : 1.1. In the present case, the settlor has not reserved any right 
to receive maintenance either for himself or for any of his relatives. Hence 
c 
the Explanation to Section 12(1) of the Estate Duty Act, 1953 in not relevant. 
The direction in the trust deed that the expenses of the settlor for pilgrimage 
performed for religious purposes be paid out of the trust fund, wm not be 
equivalent to reserving an interest in the property for life. Nor will payment 
towards religious and charitable purposes at the direction of the settlor 
constitute a reservation of any interest by the settlor of himself in such 
D property for life. This will be more so since, in fact, the settlor did not 
receive any amount from the said trust during his lifetime. Nor did he 
undertake any pilgrimage. 1835-F-Gl 
1.2. The fact in the present case do not indicate that any interest within 
the meaning of Section 12 of the Act was retained by the settlor in the settled 
E property for life or any other period determinable by reference to his death. 
Hence Section 12(1) is not attracted. 1832-B) 
CED v. R. Kanakasabai, 89 ITR 251, relied on. 
Dipti Narayan Srimani v. CED, 172 ITR 477, and Ravindra Gunvantilal 
F v. CED, held inapplicable. 
CED v. Mahant Umesh Narain Puri, 135 ITR 139, referred to. 
2. In the present case, the settlor, never, in fact enjoyed any benefit 
under the said trust at any time although the settlor is entitled to have Haj 
G expenses of himself and any accompanying fa111ily members paid out of the 
trust fund. Therefore, there can be no application of Section I 0 of the Act. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2803 of 
1984. 
H 
From the Judgment and Order dated 2.12.83 of the Andhra Pradesh High 
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T. OF 'tl.E H. NIZAM'S PM Tr. COLLEC OF E. DUTY (SUJATA V MANOHAR,

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