TMI Blog2015 (2) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... at present or in future. Once the deed has stipulated that on the death of the two women, their children would become the beneficiaries, the occasion to invoke section 21(4) of the Act does not arise. The inescapable conclusion is that the assessment must be under section 21(1) of the Act. - Decided in favour of the assessees. - R.C.Nos. 65 of 1995 & 236, 245 and 263 of 1996 - - - Dated:- 25-6-2014 - SRI L. NARASIMHA REDDY AND SRI CHALLA KODANDA, JJ. For the Appellant : Sri Ravindra Chenji For the Respondent : Sri S. R. Ashok JUDGEMENT L. Narasimha Reddy J.- These four references are in relation to the same subject matter. The only difference is that R. C. No. 65 of 1995 is at the instance of the assessees, whereas remaining three are at the instance of the Revenue. The matter arises under the Wealth-tax Act (for short the Act ). The H. E. H. Nizam's Wedding Gifts Trust was created for the benefit of H. E. H. Nizams two granddaughters, by name Ameena Marzia and Fatima Fouzia. The trust was assessed to wealth-tax. The trust deed provided, inter alia, that the two women mentioned therein shall be entitled to wear the jewels, which are the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax (Appeals) who held that the interest of the beneficiaries in the trust property was assessable under section 164 of the Act ? R. C. No. 245 of 1996 (1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in holding that the right to wear the jewellery is not an asset in spite of the decision of the Andhra Pradesh High Court in the case of CWT v. The Trustees of H. E. H. Nizam's Sahebzadi Anwar Begum Trust reported in [1981] 129 ITR 796 (AP) wherein it was held that the interest in jewellery fund was assessable under section 21(1) of the Wealth-tax Act ? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in holding that the children of the two ladies, namely, Sb. Fatima Fouzia and Sb. Amina Marzia, get accelerated interest in the trust properties in spite of the clauses in the Trust deed that they acquire interest in the trust property only after the life time of the ladies, namely, Sb. Fatima Fouzia and Sb. Amina Marzia ? (3) Whether, on the facts and in the circumstances of the case, the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the question of succession opens only on the death of Sb. Amina Merzia (Sb. Fatima Fouzia in R. A. No. 363/Hyd/94), the life time beneficiary after having held that her interest in the trust ceased on the sale of the jewellery ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the capital gain is a notional or deemed income under section 45 of the Income-tax Act, 1961, for the purpose of taxation and thereby making differentiation between other income and capital gains ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the capital gain if any got merged with the corpus and formed part of the corpus ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the children of Sb. Fatima Fouzia are only corpus beneficiaries and not income beneficiaries ignoring the term of the trust deed ? (5) Whether, on the facts and in the circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he death of the ladies and the question of there being any beneficiaries during the life time of those ladies does not arise. He submits that the Commissioner and the Tribunal ignored certain undisputed facts and refused to apply the specific provisions of the Act. Sri Ravindra Chenji, learned counsel for the assessees, on the other hand, submits that the dispute is no longer res integra and it is covered by the judgment of the hon'ble Supreme Court in CWT v. Trustees of H. E. H. Nizams Family (Remainder Wealth) Trust [1977] 108 ITR 555 (SC). He contends that in identical circumstances, the hon'ble Supreme Court took the view that even where a trust deed provides for a vested remainder in favour of some persons and no life estate as such is created, the authority under the relevant provisions of the Act has to be guided by the contents of the trust deed. He submits that once the trust deed has provided for devolution of the property to the children of the two women, the beneficiaries, are clearly identified and thereby, the occasion to invoke section 21(4) of the Act does not exist. That there existed wealth, amenable to the tax, is beyond any pale of doubt. It is equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust are either unknown or it is difficult to determine them, the assessment must be made under that provision. For this purpose, one has invariably to look into the contents of the trust deed itself, and no other course is permissible. In the instant case, the terms of the trust deed are very clear and unambiguous. Even while conferring a limited privilege of wearing the ornaments in favour of the named women, the trust deed has clearly mentioned that on the death of the two women, the jewellery shall devolve upon their children. It is true that during the life time of the two women, it is difficult to treat any particular individual as the immediate beneficiary, particularly when the right was restricted only to the one of wearing and returning the jewels. However, in law, what becomes necessary is whether there are any beneficiaries at all. It is immaterial whether they are the beneficiaries at present or in future. Once the deed has stipulated that on the death of the two women, their children would become the beneficiaries, the occasion to invoke section 21(4) of the Act does not arise. The inescapable conclusion is that the assessment must be under section 21(1) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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