High Court Of Andhra Pradesh (Full Bench)
Commissioner Of Wealth Tax vs. Trustees Of Sahebzadi Anwar Begum Trust
Sections WT 2(e), WT 21(1)
Asst. Years 1970-71, 1971-72, 1972-73, 1973-74, 1974-75, 1975-76
P. Venkatarama Reddi, Krishna Saran Shrivastav & A. Hanumanthu, JJ.
Case Refd. No. 41 of 1989
7th August, 1998
Counsel Appeared
S.R. Ashok, for the Revenue : P. Muralikrishna, for the Assessee
JUDGMENT
P. VENKATARAMA REDDI, J. :
This wealth-tax reference case has been placed before the Full Bench on an order of reference made by the Division Bench consisting of Syed Shah Mohammed Quadri J. and Parvatha Rao J. The Division Bench found an apparent conflict between the two decisions of this Court—R. C. No. 67 of 1969 (unreported) and CWT vs. Trustees of H. E.H. the Nizam’s Sahebzadi Anwar Begum Trust (1981) 129 ITR 796 (AP) : TC 67R.467. Both these cases arose between the same parties.
2. The assessment years involved in this reference case are 1970-71 to 1975-76. The following questions of law were referred by the Tribunal, Hyderabad, on a direction given by the High Court, at the instance of the Revenue :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee had no beneficial interest in the entire corpus regarding the shares fund liable to be assessed to wealth-tax under s. 21(1) ?
Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the jewellery fund was not liable to be assessed to wealth-tax under s. 21(1) ?
Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that it was not open to the WTO to make an assessment under s. 21(1) subsequent to the direct assessment on the beneficiary ?
Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessments under s. 21(1) were not justified being in the nature of double assessments ?”
3. We may indicate here that the conflict of views noticed by the Division Bench is with regard to the second question. In regard to the other questions, there was practically no debate before us. Before we take up for consideration the main and perhaps the only contentious issue which is question No. 2, we shall advert to the facts giving rise to this reference case. A trust called “Sahebzadi Anwar Begum Trust” was created by the Nizam of Hyderabad, H. E. H. Mir Osman Ali Khan Bahadur, by an indenture dt. 21st March, 1953. The sole beneficiary of the trust is Mrs. Sahebzadi Anwar Begum (hereinafter referred to as “Anwar Begum”) who was the daughter-in- law of the settlor. The assessees in the instant case are the trustees of the said trust “representing Sahebzadi Anwar Begum”. The Tribunal clarified that Anwar Begum is represented by the trustees, who filed the returns of wealth on her behalf. The WTO made an assessment under s. 16(3) of the WT Act on the value of the life interest of Anwar Begum in the shares fund held by the trustees and her beneficial interest in the jewellery fund mentioned in Part-I, First Schedule, of the trust-deed estimated at Rs. 25,000. To the above two sums, he added the personal wealth already assessed in her individual capacity for the purpose of applying the rate. However, for the year 1975-76, the WTO estimated her beneficial interest in the jewellery in Part-I by determining the income which the jewellery could have fetched if invested in gilt-edged securities and applying the multiplier based on r. 1B, he quantified the wealth attributable to Part-I jewellery at Rs. 5,08,638. No assessment was made in respect of Part-II jewellery as it was probably sold out, as seen from the assessment order for 1975-76. On appeal, the Appellate CIT upheld the assessments for each of the assessment years. As regards jewellery, the AAC purported to follow the decision in CWT vs. Trustees of H.E.H. the Nizam’s Sahebzadi Anwar Begum Trust (1981) 129 ITR 796 (AP) : TC 67R.467, in preference to the earlier decision in R. C. No. 67 of 1969 and held that Anwar Begum had not merely a right to wear but also beneficial interest in the entire jewellery fund, which, according to the appellate authority, ought to be valued on the basis of actuarial valuation. The AAC, therefore, directed the reference to a recognised actuary to fix the value thereof. In that sense, he enhanced the assessment and directed recomputation of the wealth, while rejecting the plea of the appellant-assessee. The AAC also held that the assessment of the beneficial interest of Anwar Begum could be made in the hands of the trustees under s. 21(1) although there was a direct assessment on Anwar Begum earlier. On appeal to the Tribunal, the decision of the AAC was reversed and the appeals were allowed. The Tribunal followed the decision of this Court in R.C. No. 67 of 1969 dt. 5th Nov., 1970, which relates to wealth-tax assessments of the same assessee for the earlier years. The Tribunal held that there is no beneficial interest which can be treated as an asset within the meaning of s. 2(e) of the WT Act. The Tribunal expressed the view that the decision in CWT vs. Trustees of H.E.H. the Nizam’s Sahebzadi Anwar Begum Trust (supra), on which the AAC placed reliance, has no direct application as the issue involved therein was quite different. The Tribunal further held that the WTO having opted to make direct assessment on the beneficiary and having made a reference to the returns filed by the trustees, it was not open to him to resile from the option and choose to make an assessment again on the trustees. On this view also, the Tribunal felt that the impugned assessments were liable to be set aside.
4. Before we proceed further, it is necessary to refer to the relevant clauses in the trust deed in so far as jewellery is concerned. The relevant clause is cl. 4 and the same is extracted hereunder to the extent necessary : “4. The trustee shall hold and stand possessed of the said ornaments and articles of jewellery specified in the First Schedule hereunder written hereinafter for brevity’s sake called ‘the jewellery fund’ (which expression shall include all other properties or investments of any kind whatsoever into which the same or any part thereof may be converted or varied from time to time and such as may be acquired by the trustees or come to their hands by virtue of these presents or by operation of law or otherwise howsoever in relation to these presents) Upon the trusts following, namely : (a) As soon as conveniently possible after the execution hereof to deposit and keep deposited in their joint names all the articles specified in Part-I of the First Schedule hereunder written for safe custody with some safe deposit company or bank of good repute approved of by the trustees preferably in Bombay. (b) Until the death of the settlor’s daughter-in-law, Sahabzadi Anwar Begum, the wife of the settlor’s second son, Prince Muazzam Jah Bahadur, or until she shall have been divorced from the said Prince Muazzam Jah Bahadur or until she shall remarry some other person, whichever of the three events shall take place first, to hold the jewellery fund upon trust : (i) To allow the said Sahebzadi Anwar Begum to wear and use the articles specified in Part-I of the First Schedule hereunder written or such of them as may be required on and for the purpose of any special ceremonial or festive occasion and after any such ceremonial or festive occasion shall be over, to take charge of such articles from the said Sahabzadi Anwar Begum and to redeposit the same for safe custody in the joint names of the trustees with some safe deposit company or bank of good repute approved of by the trustees preferably in Bombay provided that the trustees shall not be liable or held responsible in any manner whatsoever by any person whomsoever for any loss or damage that may be caused to or in respect of any of the said articles specified in Part- I of the First Schedule hereunder written in the course of the removal or transit of any of the said articles for the purpose aforesaid or for any other consequences resulting from the action of the trustees in allowing the said articles or any of them to be worn or used as aforesaid. (ii) To allow the said Sahebzadi Anwar Begum to wear and use the articles specified in Part-II of the First Schedule hereunder written for her ordinary and every day use without the trustees being in anyway liable or held responsible in any manner whatsoever by any person whomsoever for any loss or damage that may be caused to or in respect of any of the said articles specified in Part- II of the First Schedule hereunder written on account or in the course of the same being kept with or worn or used by her as aforesaid or for any other consequences resulting from the action of the trustees in allowing the said articles or any of them to be kept with or worn or used by her as aforesaid : Provided, however, that if at any time before her death or divorce or remarriage as aforesaid, whichever of the three events shall take place first, any part of the jewellery fund be converted into any income yielding investment, then the trustees shall pay the net income of such investment comprised in the jewellery fund to her until her death or divorce or remarriage as aforesaid, whichever of the three events shall take place first.” As to the disposal and devolution of the jewellery after the death of the Anwar Begum or in the event of her divorce from the Prince or her remarriage, sub-cl. (c) cl. 4 provides for the same and it is not relevant for our purpose.
5. Now, a quick look at the relevant provisions. Sec. 3 of the WT Act is the charging section, according to which wealth-tax is chargeable on the net wealth on the corresponding valuation date. Sec. 4 specifies the assets which ought to be included in the net wealth and which in the normal course may not be capable of being brought within the charging section. Then comes s. 5 which bears the caption “Exemptions in respect of certain assets”. The assets specified in various clauses of s. 5 will not fall under the net wealth of the assessee. Jewellery meant for personal use of the assessee was one of the items specified in s. 5 till 1972. However, w.e.f. 1st April, 1972, exemption on jewellery was retrospectively withdrawn. Sec. 7 provides for valuation of assets as it stood at the relevant point of time. Sub-s. (1) of s. 7 enjoins that the value of any asset other than cash shall be estimated to be the price which in the opinion of the AO, it would fetch if sold in the open market on the valuation date. This is subject to the rules, if any, made in this behalf. Sec. 14 obliges a person to furnish returns of his net wealth or the net wealth of any other person in respect of whom he is assessable if on the valuation date, his net wealth or the net wealth of such person exceeds the maximum amount which is not chargeable to wealth-tax. Sec. 21 provides for assessment on the court- of-wards, administrator-general, official trustee, receiver, manager or trustee in case the assets are held by them and the assessment is liable to be made in the like manner and to the same extent as the wealth-tax is liable to be levied on the person on whose behalf or for whose benefit the assets are held. Sec. 21(4) provides for levy and recovery of wealth-tax from the trustee, etc., in case the shares of persons on whose behalf or for whose benefit any such assets are held are indeterminate or unknown. It may be noted at this juncture that the assessments were made in the instant case on the trustees under s. 21(1). The term “assets” is defined in s. 2(e) as including “property of every description, movable or immovable” ; it does not however include the items of property specifically mentioned therein. The term “net wealth” is defined in s. 2(m). The aggregate value of all the assets belonging to the assessee on the valuation date minus the aggregate value of all the debts owed by the assessee constitutes his net wealth.
6. Coming to the core question, it is seen from the terms of the trust deed that the trustees are required to allow Anwar Begum to wear and use the jewels specified in Part-I of the First Schedule on ceremonial or festive occasions and to allow her to retain the jewels specified in Part-II for her “ordinary and every day use”. Anwar Begum is allowed to wear and use the jewels in the manner aforesaid until her death, divorce or remarriage. In the event of death, divorce or remarriage, the trustees are enjoined to sell the jewels and invest the sale proceeds and pay the income to the children and other remote issues of Anwar Begum and Prince Muazzam Jah. Provision for devolution in the event of failure of issues is also made. The trustees are empowered to convert the jewellery into income-yielding investment subject to the condition that the net income from the investment has to be paid over to Anwar Begum.
7. Having noticed these salient features of the trust deed, Chinnappa Reddy J., speaking for the Division Bench, observed in R.C. No. 67 of 1969 : “Even so, we are not satisfied that the interest of the Sahebzadi in the Jewellery Fund is an asset within the meaning of s. 2(e) of the WT Act. Under the terms of the trust, the Sahebzadi is merely allowed to wear the jewels. She has no proprietary interest of any sort in the jewels. For instance, she cannot pledge the jewels, she cannot lend the jewels to a friend or relative to be worn on occasions. The trustees are further given the right to withdraw the jewels from her any time they like and sell them. No doubt, the income from the sale proceeds will have to be paid to the Sahebzadi but Sahebzadi herself has no voice on the question whether the jewels may or may not be sold. Her interest in jewels is limited to being allowed to wear them if the trustees do not withdraw them from her. To our minds, the interest appears to be of the permissive nature and cannot be called ‘property’ however widely the expression may be interpreted. We, therefore, agree with the Tribunal that neither the interest of the Sahebzadi in the jewellery fund nor her interest in the shares fund is an asset within the meaning of the WT Act.” Their Lordships expressed the view that the phrase “property of every description” is an expression of wide import. The learned judges observed that the words “movable or immovable” following the expression “property of every description” are meant to enlarge rather than restrict the scope of the definition. The learned judges also recorded their dissent with the view expressed by P. B. Mukharji, Actg. C. J. othe Calcutta High Court, in CWT vs. U. C. Mahatab (1970) 78 ITR 214 (Cal) : TC 64R.161 to the effect that the properties which do not answer the test of movability or immovability such as an intangible right do not come under the definition of “assets” and the words “movable or immovable” restrict the plenitude of the meaning of “property of every description”. The Division Bench relied on the following observations of the Supreme Court in Ahmed G.H. Ariff vs. CWT (1970) 76 ITR 471 (SC) : TC 64R.457 : “Now ‘property’ is a term of the widest import and, subject to any limitation which the context may require, it signifies every possible interest which a person can clearly hold or enjoy . . . There is no reason or justification to give any restricted meaning to the word ‘asset’ as defined by s. 2(e) of the Act when the language employed shows that it was intended to include property of every description.”
The learned judges who decided in R. C. No. 67 of 1969, also rejected the contention advanced by counsel for the assessee that the test of transferability or marketability should be satisfied. The proposition enunciated by the Division Bench of the Bombay High Court in CWT vs. Purshottam N. Amersey (1969) 71 ITR 180 (Bom) : TC
65R.402 was referred to with approval. In that decision, the learned judges of the Bombay High Court observed that the use of the words “if sold” creates a fictional position which the tax officer has to assume and “the tax officer must assume that there is an open market in which the asset can be sold and proceed to value it on that basis”. Having thus far expressed a view against the assessee, the learned Judges came to the conclusion that the interest of Anwar Begum in the jewellery fund is not an ‘asset’ within the meaning of s. 2(e). The legal position was clarified by Chinnappa Reddy J. in the passage quoted supra. The reference was accordingly answered in favour of the assessee.
8. The above decision in R. C. No. 67 of 1969 was followed and applied to a case in which a right to live in the house during the life-time of the assessee was conferred by the terms of the trust deed. Pursuant to the directions in the trust deed, the trustees constructed a house for the purpose of residence of the assessee during his life-time free of rent. It was held by the Division Bench consisting of Jeevan Reddy J. and Neeladri Rao J. that the right to live in the house without anything more cannot be called an “asset” within the meaning of ss. 2(e) and 7(1) of the WT Act. After referring to the decision in R. C. No. 67 of 1969 (mentioned by mistake as R. C. No. 69 of 1969), the learned Judges observed : “We are of the opinion that the said reasoning applies equally to the interest of the assessee concerned herein. Here too the interest of the assessee is in the nature of a licence. He can only live there. He cannot dispose of the said interest nor can he deal with it in any manner to his benefit. It cannot also be said that he has a proprietary interest therein.” Whether or not the reasoning in R. C. No. 67 of 1969 in relation to the right to wear jewellery applies with equal force to the right of the beneficiary to live in the house throughout his life without payment of any rent, we do not want to express any opinion. Suffice it to note that the reasoning and dicta in R. C. No. 67 of 1969 was extended even to a case where the content of the right given to the beneficiary over the trust property was of much greater magnitude. We shall now examine the decision in CWT vs. Trustees of H. E. H. the Nizam’s Sahebzadi Anwar Begum Trust (supra) which has inspired the IT authorities to take the view against the assessee, notwithstanding the earlier decision of this Court in R. C. No. 67 of 1969. As rightly pointed out by the Tribunal, the question whether the right or privilege of wearing the jewellery was an “asset” “belonging” to the assessee did not directly arise for consideration therein. The material questions considered by their Lordships in CWT vs. Trustees of H. E. H. the Nizam’s Sahebzadi Anwar Begum Trust (supra) are : “1. . . . Whether, on the facts and in the circumstances of the case, the jewellery mentioned in Part II of the First Schedule could be excluded in determining the net wealth assessable in the assessee’s hands for each of the valuation dates ?
Whether, on the facts and in the circumstances of the case, jewelleries mentioned in Part I of the First Schedule and shares to the extent of Rs. 3,60,000 out of the share fund be assessed in terms of s. 21(1) of the WT Act in the assessee’s hands in respect of each of the valuation dates ? Whether, on the facts and in the circumstances of the case, and on a true reading of s. 21 of the WT Act in so far as it applies to the trustees, the material persons to be held as beneficiaries under the trust on the valuation dates for the assessment years in question are : (i) Smt. Sahebzadi Anwar Begum with a determinate share, as well as . . .”. As far as question No. 2 is concerned, the learned judges were not really concerned with the point whether the right conferred on the beneficiary to make use of Part II jewellery is in the nature of an asset chargeable to wealth-tax. The point considered was whether it was exempt from being charged to wealth-tax under s. 5(1)(viii) as it stood before the amendment effected in 1971 by the Finance (No. 2) Act of 1971. That question was answered in favour of the assessee on the following reasoning : “The jewellery in Part II of the First Schedule was exclusively kept for the ordinary and every day use of Sahebzadi Anwar Begum. It is not in dispute that the jewellery meant for the ordinary and every day use, if aasset, is exempt from being charged to wealth-tax under s. 5(1)(viii) of the WT Act [vide Nizam’s Supplemental Jewellery Trust vs. CWT (1975) TLR 1085 (AP)]” (Emphasis, italicised in print, supplied)
11. It is seen from the above passage that the question answered was not whether the personal right of user of jewellery is an asset, but the question decided was whether even assuming it to be an asset, it is exempt from wealth-tax under s. 5(1)(viii). The same idea was conveyed by the learned Judges while referring to the decision in R. C. No. 67 of 1969. The crux of the controversy that they were dealing with was expressed by their Lordships in the following terms : “In the present case, the point that arose for consideration was whether the jewellery fund is liable to be assessed under s. 21(1) of the WT Act.”
The earlier Bench decision was distinguished on the ground that in R.C. No. 67 of 1969 : “this aspect was not under consideration but was confined to the point whether the mere wearing of jewellery constitutes an asset”. It was observed : “Taking into consideration the terms of the trust deed in the instant case, we are of the view that the jewellery fund is liable to be taxed under s. 21(1) of the WT Act.”
The real ratio of the decision is that the jewellery meant for every day use (Part II jewellery) even if it be an asset, is exempt from tax under s. 5(1)(viii) in the hands of the beneficiary and, therefore, no tax could be levied on trustees whose liability is co-extensive with that of beneficiary, as ordained by s. 21(1). However, the underlined expression in the following sentence is sought to be pressed into service by the Revenue to make out a case of conflict with the decision in R.C. No. 67 of 1969 which the learned Judges themselves distinguished. The said sentence is as follows : “In this view of the matter, the jewellery in Part II of the First Schedule, though it constitutes an asset, is exempt from being charged to wealth-tax.” If we may say so with respect, the phrase “though it constitutes an asset” is not an accurate expression and it is used more or less as an equivalent to the expression—”even if it constitutes an asset”. Except the analysis of the provisions of the trust deed and the arguments of the Revenue, no conscious finding was reached that the right of personal use of jewellery is an asset. We are, therefore, of the view that nothing laid down in CWT vs. Trustees of H.E.H. the Nizam’s Sahebzadi Anwar Begum Trust (supra) conflicts with the view taken in R.C. No. 67 of 1969. As regards Part I jewellery, the learned Judges took the view that the beneficial interest therein is liable to be assessed in terms of s. 21(1) because s. 5(1)(viii) has no application as the jewellery was not meant for every day personal use, but it was meant for use only on ceremonial or festive occasions. Thus, both with regard to Part I and Part II jewellery, the learned Judges held that s. 21 (1) was applicable, but Part II jewellery was not liable for wealth-tax as the said jewellery was exempt from tax as per cl. (viii) of s. 5(1) as it then stood. The question whether the use of Part I jewellery on certain occasions is an asset chargeable to wealth-tax did not fall for consideration at all. It is to be noted that following the decision in R. C. No. 67 of 1969, this Court rejected the reference application of the Department in W. T. C. No. 4 of 1991. The special leave petition filed by the Department against the said order was dismissed on 19th Jan., 1998. We are only referring to this fact to complete the narrative though we are conscious that in the absence of a reasoned order, the dismissal of the special leave petition cannot by itself be construed as a binding precedent.
12. Notwithstanding the fact that there is no real conflict between the decisions in R. C. No. 67 of 1969 and CWT vs. Trustees of H. E. H. the Nizam’s Sahebzadi Anwar Begum Trust (supra), learned standing counsel for the Revenue has endeavoured to canvass the correctness of the decision in R. C. No. 67 of 1969, undaunted by the fact that the decision held the field for nearly three decades and the logic of the principle laid down therein was extended to certain other analogous situations as well. As the matter has come up on reference to the Full Bench, we have given fresh thought to the entire problem so as to see whether the established view of this Court needs to be upset even at this distance of time.
On the question of chargeability to wealth-tax of Part I jewellery, we are inclined to reiterate the view taken in R. C. No. 67 of 1969 and hold that the right—if at all it is a right, conferred on Anwar Begum to wear the jewellery on ceremonial or festive occasions, cannot be regarded as an “asset” within the meaning of s. 2(e) of the WT Act.
Let us now analyse the terms of the trust deed as embodied in clause 4. Clause 4 opens up with the prefatory words ” the trustees shall hold and stand possessed of the said ornaments and articles of jewellery specified in the First Schedule”. The bracketed words recognise the power of the trustees to convert them into “other properties or investments of any kind”. The opening words, namely “the trustees shall hold and stand possessed of the said ornaments . . .” make it clear that the legal title as well as possession in the jewellery remains with the trustees. The jewellery items specified in Part I are to be deposited in the joint names of the trustees with a company or bank of good repute preferably in Bombay for safe custody thereof. Clause (b) reemphasises that until the death, divorce or remarriage the trustees will “hold the jewellery fund upon trust”. Sub-cl. (i) of clause 4(b) empowers the trustees “to allow Sahebzadi Anwar Begum to wear and use the articles specified in Part I or such of them as may be required on and for the purpose of any special ceremonial or festive occasion” and after such ceremonial or festive occasion is over, the trustees are to take charge of such articles from Anwar Begum and redeposit the same for safe custody in a company or bank as aforementioned. Sub-cl. (i) further provides that the trustees shall not be liable or held responsible for any loss or damage that may be caused to the articles specified in Part I in the course of removal or transit of the said articles or for any other consequences resulting from the action of the trustee in allowing the said articles to be worn and used by Anwar Begum. Thus, what is contemplated by the trust deed is nothing more that the occasional entrustment of the jewellery to Anwar Begum to enable her to wear the same on festive and ceremonial occasions. Excepting during these limited days and for a limited time, for all legal and practical purposes, the jewellery is in the possession and control of the trustees only. On those special occasions, Anwar Begum will just have temporary custody of jewellery for the purpose of wearing them. The trustees will hand them over to Anwar Begum, and take them back immediately after the occasion is over. As the instrument itself says, the trustees “allow” her to wear the jewellery on those special occasions. The idea of limited and permissive user so clearly reflected in the terms of the trust deed makes it difficult to recognise any right of ownership or to possession, and it would be difficult to recognise an iota of proprietary interest in Anwar Begum. It cannot be said that the privilege conferred on Anwar Begum to wear the jewellery for a limited time on special occasions bears the imprint of a proprietary right or interest. Both de jure and de facto possession rests with the trustees, apart from the legal title in relation thereto. The discretion of the trustees to convert jewellery into income-yielding investment as provided for by the proviso occurring after sub-cl. (ii) of cl. 4, is yet another feature which militates against the conclusion that it constitutes the net wealth of Anwar Begum. It indicates that the trustees need not necessarily make the jewellery available for her limited use till her death, divorce or remarriage. At any time, for good reason, the jewellery can be disposed of without regard to the will of the beneficiary. True, she will then get a right to receive the income. But, that is not a right in praesenti or a proprietary interest crystallised on the valuation date. It is wrong to think that an asset is created in her favour by the trust deed merely because she has a limited privilege to use the Part I jewellery or she can draw the income after their conversion into income-yielding assets. No money value can possibly be attributed to the limited privilege which Anwar Begum had under the terms of trust deed in regard to Part I jewellery, on the relevant valuation date.
Learned standing counsel for the IT Department relying on the decision of the Supreme Court in Nawab Sir Mir Osman Ali Khan vs. CWT (1986) 57 CTR (SC) 89 : (1986) 162 ITR 888 (SC) : TC 64R.558 submits that a husk or semblance of title is sufficient to attract the charge under the WT Act. In that case, the Supreme Court was dealing with the question whether the property in respect of which registered sale deeds had not been executed, but consideration for sale was received and possession was delivered, could be included in the net wealth of the vendor. The contention that such assets cannot be said to “belong” to the assessee was negatived and the question was answered in favour of the Revenue. The connotation of the expression “belonging to” occurring in s. 2(m) was discussed. The ultimate conclusion was that the legal title continued to remain with the vendor as the conveyance deed had not been executed and registered, as required by law. It was observed : “The assessee had not the totality of the rights that constitute title but a mere husk of it and a very important element of the husk of it”. We do not think that the ratio of that decision which construed the expression “belonging to”, applies to the instant case as the vendor was not technically divested of his title to the lands sold out and the title in rem still vested in him. He continued to be the real and legal owner, as pointed out by the Supreme Court. That conclusion reached by the Supreme Court, though reluctantly, has no relevance here. It is true that in ordinary and normal signification, a trust gives rise to dual ownership. But, in the instant case, it is difficult to say that the beneficiary owns or holds the trust property in any sense. The various incidents and features discussed above do not go to suggest any element of ownership inhering in the beneficiary in regard to the trust property nor even a right to be in possession thereof. As pointed out by the Supreme Court in the same case, “it is the property of a person, or that which is in his possession as of right, which is liable to wealth-tax” [vide para. 13]. It is difficult to say that the right to wear the trust jewellery on specified occasions, that too, so long as the jewellery is not disposed of by the trustees, does qualify to be regarded as an asset and property belonging to Anwar Begum, even if it bears some traces of beneficial interest.
Learned senior standing counsel also referred to the recent decision of the Supreme Court in CIT vs. H. H. Maharani Usha Devi (1998) 147 CTR (SC) 1 : (1998) 231 ITR 793 (SC). In that case, the Supreme Court held that heirloom jewellery owned by the assessee was not liable to wealth-tax for the reason that it constitutes the personal effects of the assessee held for personal use and, therefore, stood excluded from the ambit of s. 2(14) of the Act. Thus, the question answered therein is vastly different and has no bearing on the issue involved in the present case.
We, therefore, affirm the finding of the Tribunal on this aspect and answer the question against the Revenue.
Then remains the question whether Part II jewellery should be treated on the same footing as Part I jewellery. We consider it unnecessary to deal with this question. In fact, question No. 2 could have been confined to only Part I jewellery inasmuch as Part II jewellery was not subjected to tax for any of the years. It is noted in the assessment order for 1975-76 that during the assessment year ending on 31st March, 1972, Part II jewellery was sold out and Part II jewellery is shown as “nil”. Even for the asst. yrs. 1970-71 and 1971-72 the value of Part II jewellery has not been included in assessable wealth, probably because the jewellery was not in existence. We, therefore, consider it unnecessary to answer the second question vis-a-vis Part II jewellery.
Coming to the first question, the point is squarely covered by the decision of this Court in R. C. No. 67 of 1969. It was held that the interest of Anwar Begum in the “shares fund” is not an asset within the meaning of s. 2(e) of the Act because it is in the nature of a right to receive annuity which cannot, under the terms of the trust deed, be commuted into a lump sum grant and, therefore, falls under the exclusionary clause. Correctness of this decision has not been questioned nor is there any decision which runs contrary to the view expressed by their Lordships in R. C. No. 67 of 1969. We see no reason to take a fresh look into the matter. Question No. 1 is, therefore, answered in favour of the assessee and against the Revenue.
As regards the other two questions, i.e., 3 and 4, there is no need to answer them when once it is held that the shares fund and the jewellery fund are not liable to be assessed to wealth-tax at all in the hands of Anwar Begum, as they do not constitute her assets. We, therefore, decline to answer these questions.
The R.C. is, accordingly, disposed of. We make no orders as to costs.
[Citation : 234 ITR 282]
