TMI Blog1994 (10) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... vable properties of trust property was liable to be assessed to wealth-tax under the provisions of the Wealth-tax Act, 1957 ? " The reference concerns the assessment of wealth-tax for the assessment year 1965-66. Shri Pestanji Contractor, the father of Pirojshah, left a will dated June 4, 1941, and a codicil dated July 23, 1941. Clause 17 of the will executed by Pestanji Contractor, reads as follows : " 17. All the property, excluding those gifted above, or any of the property mentioned in this will, whose disposition is considered to be illegal due to legal interpretation, should be considered to be residual property and the income from all such property should be allotted equally to my wife, Jerbai, and my son, Pirojshah, till they s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en, as the case may be. The division of the property among the children should be equal and such division should be carried out when the last of the children of Pirojshah becomes 18 years of age. " Smt. Jerbai died on April 6, 1961, and as per the aforesaid clause, Pirojshah, since deceased and now represented by legal heirs, became, entitled to the whole of the income of the estate. By the deed of assignment dated December 6, 1951, Pirojshah assigned to his children Mani, Fali and Rusi moiety of half share of the net rents, profits and income which had accrued to him since April 6, 1951, the date of death of Jerbai. The assignment was for the lifetime of Pirojshah. The resultant position was that after the assessee became entitled to fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the net wealth of the assessee and not the whole value. The Tribunal upheld the order of the Appellate Assistant Commissioner while rejecting the appeal and directed the Wealth-tax Officer to include half of the capitalised value of the interest in the immovable properties. In the aforesaid facts and circumstances, the Tribunal has made this reference. From a perusal of clause 17 referred to above, it appears to us that no interest in the corpus came to be vested in the assessee, but he was only entitled to the income derived from the trust property under the will for life. During the lifetime of Jerbai, the assessee was entitled to only half of the interest and on the death of Jerbai, he became entitled to the whole income. After the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Jerbai on April 6, 1951, the assessee became entitled to the entire income derived from the residuary property. The assessee had the right to receive this income during his lifetime. In other words, he had a right and interest in the residuary property. The assessee had, therefore, a right to transfer or assign this asset or portion thereof. There is no legal provision which prohibited the assessee from transferring or assigning his right to receive income from the residuary property during his lifetime. There is nothing in the will also which prevented the assessee from assigning his right to receive income. The assessee was, therefore, within his right in executing the deed of assignment on December 6, 1951, transferring or assigning ..... X X X X Extracts X X X X X X X X Extracts X X X X
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