TMI Blog1968 (11) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... said land, either in one plot or in different plots. The trust fund was directed to constitute of all the rents and profits of the said land and sale price thereof. By term No. 3 the trustees were directed to spend a sum not exceeding Rs. 10,000 only for the marriage expense of Kumari Dipali. The trustees were also directed to set apart a sum of Rs. 15,000 for the construction of a building on the land settled for her benefit by the deed dated July 17, 1941. By term No. 4 the trustees were directed to construct a building on a part of the plot of land settled for the benefit of Kumari Sefali at a cost of about Rs. 20,000, and by term No. 5, the trustees were further directed to spend a sum not exceeding Rs. 10,000 for the marriage expense of Sefali. By term No. 6 the trustees were directed to spend a similar amount of Rs. 10,000 for marriage and Rs. 20,000 for construction of house for Kumari Juthika. By term No. 7 the trustees were directed to provide for the marriage expense and maintenance of Kumari Asoka. By term No. 8 it was directed if the total sale proceeds exceeded or fell below the sum of Rs. 80,000, the trustees would reduce or enhance the amounts for marriage or for con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee at an interest of 6 per cent., and tax was sought to be assessed with respect to the aforesaid income. The Appellate Tribunal held that it could not be said that any or all the three daughters who were then living would be entitled to receive or enjoy any specific part of the income. Hence, it was found that the shares being indeterminate, the maximum rates should have been applied. The appeals were allowed. Against that decision, the assessee applied for reference and the following question has been referred to this court: "Whether, on the facts and in the circumstances of the case and on a proper construction of the deed of settlement dated 9th December, 1944, the Tribunal was right in holding that the first proviso to section 41(1) of the Indian Income-tax Act, 1922, was applicable to the income of the trust?" Dr. Debi Pal, for the assessee, refers to clause 10 and says that there is a provision that the "fund" shall be equally divided by the trustees between all the daughters of the settlor. During the years in question the number of daughters living was determined. Therefore, their shares were determined and as such the maximum rate could not have been applied. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their marriage expenses or for the construction of their houses. They have not been given the right to take interest on those sums but after meeting those expenditures the balance would be divided equally among all the surviving daughters of the settlor. This balance of fund includes interest because interest is not provided for anywhere else. Hence clause 10 is a specific provision whereby the interest would not go to the daughters to whom "funds" have been given. Clause 11 is also relevant for that purpose: if any of the daughters die unmarried or childless her properties and funds (but not interest thereon) would devolve upon the sons or male heirs of the settlor. Hence, if any of the daughters dies before her marriage or dies childless before the house is constructed for her, the sums allotted to her for the purposes or any of the purposes would not go to the heirs of the said daughter but to the male heirs of the settlor. Hence, this is also a provision that the interest would not accrue to the daughters or their heirs to whom special funds have been allotted. In other words, the interest was not intended to be vested in the daughters. Hence, from a reading of clause 10 and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the years of assessment had a vested right to get the income in any defined share. Dr. Debi Pal has referred to certain decisions to contend that whether the interest is vested or contingent the share of a daughter was determinable and the maximum rate would not apply. It is stated that during the year in question the position was that three daughters were living and therefore each of them was entitled to the income equally. Hence, their shares were known but their shares were not known because if any of the daughters living during the assessment years would die at the time when the balance of the fund became distributable, she and her heirs would loose her right to get any share in the balance of the fund then existing. In the case of contingent interest accumulations are not the monies of the recipient until the contingency arises. It is different, however, in the case of a vested interest. Dr. Debi Pal referred to certain decisions which show that a person having contingent interest in any property is liable to wealth-tax before the contingency arises. We shall, therefore, consider the decisions referred to by Dr. Pal. As the interest here is contingent, the accumulations do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how that every contingent interest stands on the same footing as vested interest does for the purpose of Wealth-tax Act. Dr. Debi Pal next refers to the case of Padmavati Jaykrishna Trust v. Commissioner of Wealth-tax and the trust deed referred to is at page 70. In that case a beneficiary was stated to have "vested and transmissible interest". The aforesaid decision is no decision for holding that even contingent interest is to be taken into account for the purpose of the Wealth-tax Act. Dr. Debi Pal referred to a decision of the Bombay High Court in the case of Trustees of Putlibai R. F. Mulla Trust v. Commissioner of Wealth-tax. In that case, however, their Lordships were pleased to hold as follows: "Therefore the word 'shares' must be understood in the context of the assets held and we can see no reason why the word 'shares' should be limited only to a vested interest and not to include a contingent interest." Their Lordships did not add that the word "share" should include contingent interest whether the contingency arise or not. We have no doubt that the word "share" will include a contingent share after the contingency arises. It is not, however, necessary for us to cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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