TMI Blog1970 (2) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... alling within the scope of section 2(e)(iv) ? and (2) whether the value of the jewels owned by the assessee was exempt under section 5(1)(iii) in computing the net wealth of the assessee ? The assessee is an individual and the assessment years with which we are concerned in these appeals are 1957-58 and 1958-59, the corresponding valuation dates being December 31, 1956, and December 31, 1957. By a deed of settlement dated September 7, 1945, the father of the assessee settled certain shares of Indian companies of the estimated value of Rs. 5,50,325 upon trust for the benefit of his two sons and his daughter, the assessee. By another deed of settlement dated October 12, 1945, he settled certain other shares upon trust for the benefit of the assessee and her two brothers. All the terms of the two trust deeds relevant for our present purpose are identical. By a deed of settlement dated September 30, 1945, the mother-in-law of the assessee settled upon trust a sum of Rs. 3,88,931 and shares of some Indian companies of the aggregate market value of Rs. 11,81,670. The assessee is one of the beneficiaries named in that deed. The assessee also possessed jewellery of the value of Rs. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 5(1)(viii). Both the assessee, as well as the revenue, have appealed against that decision. We shall first take up the contention of the assessee that the payments to be made to her under the trust deeds are annuities which by the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant and hence are within the scope of section 2(e)(iv). If those payments fall within the scope of that provision, they cannot be considered as the assets of the assessee and therefore their value cannot be reckoned in determining, her net wealth under section 2(m). Under section 3, the charging section, only the net wealth of an assessee can be brought to tax. Hence, we have to examine the terms of the settlement deeds to find out whether the benefits conferred on the assessee by any or all of those deeds can be considered as annuity. As stated earlier the two settlement deeds executed by the father of the assessee are expressed more or less in identical language. It was conceded at the bar that whatever construction we may place on one, would be equally applicable to the other. Therefore we shall take up the deed executed on September 7, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed thus : " An annuity is a right to receive de anno in annum a certain sum ; that may be given for life, or for a series of years ; it may be given during any particular period, or in perpetuity ; and there is also this singularity about annuities, that, although payable out of the personal assets, they are capable of being given for the purpose of devolution, as real estate ; they may be given to a man and his heirs' and may go to the heir as real estate. " In Williams on Executors and Administrators, " annuity " is described as a yearly payment of a certain fixed sum of money granted for life or for years charging the person of the grantor only. In Bignold v. Giles, Kindersley V. C. described " annuity " in these words : " An annuity is a right to receive de anno in annum a certain sum ; that may be given for life, or for a series of years ; it may be given during any particular period, or in perpetuity ; and there is also this singularity about annuities, that although payable out of the personal assets, they are capable of being given for the purpose of devolution, as real estate ; they may be given to a man and his heirs, and may go to the heir as real estate ; so an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as entitled to receive for her life the annual interest accruing upon her share in the residuary trust fund. The Wealth-tax Officer included the entire value of the said share in the assessable wealth of the assessee and subjected the same to tax under section 16(3) of the Wealth-tax Act, 1957. That order was confirmed by the Appellate Assistant Commissioner but the Tribunal in appeal excluded the same in the computation of the net wealth of the assessee. On a reference made to the High Court, it was held that, on a construction of the various clauses in the will, the assessee was entitled to an aliquot share in the general income of the residuary trust fund and not a fixed sum payable periodically as " annuity " and, therefore, the value of her share was an asset to be included in computing his net wealth. These decisions in our view correctly lay down the legal position. In this view, it is not necessary to consider whether the income receivable by the assessee under those deeds, either wholly or in part, is capable of being commuted into a lump sum grant. For the reasons mentioned above we agree with the High Court that payments to be made to the assessee under the three trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 5(1)(xiii) which says that wealth-tax shall not be payable by an assessee in respect of any drawings, paintings, photographs, prints and other heirloom not falling within clause (xii) and not intended for sale but not including jewellery. If the contention that the jewellery is exclusively dealt with by section 5(1)(xv) is correct then there was no occasion for the legislature to refer to jewellery in section 5(1)(viii). From an analysis of the various provisions in section 5, it appears to us that therein there are four provisions dealing with jewellery, viz., (1) jewellery intended for the personal use of the assessee---section 5(1)(viii) ; (2) jewellery that is heirloom---section 5(1)(xiii) ; (3) jewellery in the possession of any ruler---section 5(1)(xiv) ; and (4) jewellery in general---section 5(1)(xv). Under section 5(1)(xv), as it stood at the relevant time, every assessee was entitled to deduct a sum of Rs. 25,000 from out of the value of the jewellery in her possession whether the same was intended for her personal use or not but under section 5(1)(viii) the value of all the jewellery intended for the personal use of the assessee stands excluded in the computation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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