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Interpretation of trust deed provisions regarding the liability of trustees to be assessed at the maximum rate under the Income-tax Act, 1922 based on the surrender of life interest by a beneficiary. Analysis: The judgment concerns a trust created by a settlor through a trust deed in 1932, where the trustees were required to distribute income to the settlor's wife and son during their lifetimes. The son, Shantilal, and his wife relinquished their interests under the trust deed in 1956. The Income-tax Officer initially held that this relinquishment amounted to an attempt to transfer or assign the son's rights, triggering the application of the maximum tax rate due to indeterminate beneficiaries. However, the Appellate Assistant Commissioner disagreed, viewing the relinquishment as self-effacement and accelerating succession as per the trust deed provisions. The matter escalated to the Tribunal, where the revenue contended that the relinquishment by Shantilal terminated his interest under the trust deed, invoking specific clauses for the application of the maximum tax rate. The Tribunal, relying on precedent, determined that the relinquishment accelerated the interests of Shantilal's sons, leading to dismissal of the revenue's appeal. The revenue argued that the relinquishment should trigger the trust deed clauses for maximum tax rate application. The High Court analyzed the effect of the relinquishment by Shantilal on the trust deed provisions. It noted that the relinquishment accelerated the interests of subsequent beneficiaries, as established in prior case law. The Court emphasized that unless the trust deed explicitly limited the acceleration of interests to specific circumstances, the relinquishment by Shantilal effectively vested the sons with equal shares of the trust income. The Court rejected the revenue's argument that the relinquishment constituted an attempt to transfer or assign interests, clarifying that the relinquishment relinquished all rights and powers under the trust deed without attempting to transfer or encumber them. Consequently, the Court ruled against the revenue, determining that the sons' interests were determined, and the maximum tax rate provisions did not apply. In conclusion, the Court answered the referred question negatively, holding the revenue liable for the assesses' costs.
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