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TMI Blog1971 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the same can be brought to tax under the provisions of the Wealth-tax Act, 1957 (to be hereinafter referred to as "the Act"). The Wealth-tax Officer came to the conclusion that the assessee's interest in the U. K. trust amounting to Rs. 15,75,694 plus the income-tax reserve thereon of Rs. 1,75,401 have to be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 annuity ; and (3) that the terms and conditions relating to the assessee's right to annuity preclude commutation of any portion thereof into a lump sum grant. The only question that arises for decision in this appeal is whether the share of income which the assessee is entitled to receive under the trust deed ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 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 given to a man and his heirs, and may go to the heir as real estate ; so an annuity may be given to a man and the heirs of his body ; that does not, it is true, constitute an estate tail, but that is by reason of the Statute De Donis, which contains only the word 'tenements' and an annuity, though a hereditament, is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. It is capable of being augmented in several ways. At the time of creation of the trust, the only assets mentioned in the schedule to the trust deed was pound 300,000 3 1/2 % War Loan. But as seen earlier this fund was capable of being augmented. Clauses of the trust deed which are relevant for our present purpose are clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 of the share (whether original or accruing) in the trust fund to the income whereof any beneficiary shall then be entitled in possession or any property appropriated in or towards the satisfaction of such share shall thenceforth be held IN TRUST for such beneficiary absolutely and thereupon the trusts hereinbefore declared concerning such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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