TMI Blog1971 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... e-respondent, an individual, for the year 1959-60, the corresponding valuation date being March 31, 1959. The assessee is the wife of the Maharaja of Jaipur. On September 9, 1953, the Maharaja made a settlement at London. 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 properties mentioned in the schedule to the trust deed stood transferred to the name of the trustee. The trust deed provides that the trustee should pay to the assessee during her lifetime 50 per cent. of the income of the trust fund. The question arose whether the assessee can be held to have any share in the corpus of the trust and whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion : "(1) Whether, on a proper construction of the deed of settlement, the assessee has any interest in the corpus of the deed of settlement ? (2) Whether, in the facts and circumstances of this case, the right of the assessee derived under the deed of settlement is exempt from wealth-tax by virtue of the provisions of section 2(e)(iv) of the Act ?" A Division Bench of that High Court answered the first question in the negative and the second question in the affirmative both against the department. The High Court held : (1) that the assessee was not given any interest in the corpus of the property ; (2) that the income that the assessee was receiving on account of the 15/30 parts of the trust fund was in the nature of an an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wealth-tax Act, 1957, and the capitalised value of that right is assessable to wealth-tax. In Commissioner of Wealth-tax v. Arundhati Balkrishna, this court accepted as correct the distinction brought out between an annuity and an aliquot share in the income of a fund by Kindersley V. C. in Bignold v. Giles. Therein the learned judge stated the law 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 give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ends forthwith to transfer the scheduled property into the name of the trustee to be held by him upon the trusts and with and subject to the powers and provisions hereinafter declared and contained concerning the same. Clause 1(d) of the deed is important. It reads : "The scheduled property and any other investments or property which may from time to time be transferred to and accepted by the trustee as additions to the scheduled property and any other capital moneys which may be received by the trustee in respect of the trust premises and the investments and property for the time being representing the same respectively are together called 'the trust fund'." From this clause, it is clear that the "trust fund" is not a fixed sum. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e." Clause 4(1) : "THE TRUSTEE shall stand possessed of fifteen such parts of the trust fund UPON TRUST to pay the income thereof to the wife during her life and after her death shall hold the said fifteen such parts of the trust and the income thereof upon the same trusts and with and subject to the same powers and provisions as are hereinafter declared and contained concerning the share in the trust fund which is hereinafter directed to be held in trust for the said Maharaj Kumar Jagat Singh or as near thereto as circumstances will admit." Clause 7 : NOTWITHSTANDING the trusts hereinbefore declared the trustee if he in his absolute discretion thinks fit may at any time by writing under his hand declare that the whole or any part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is an annuity or not does not depend on the amount received in a particular year. What we have to see is what exactly was the intention of the Maharaja in creating the trust. Did he intend to give the assessee a pre-determined sum every year or did he intend to give her an aliquot share in the income of a fund ? On that question, there can be only one answer and that is that he intended to give her an aliquot share in the income of the trust fund. An income cannot be an annuity in one year and an aliquot share in another year. It cannot change its character year after year. From the facts found, it is clear that the assessee has a life interest in the trust fund. For the reasons mentioned above, we allow this appeal, set aside the judg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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