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Issues Involved:
1. Taxability of the assessee's interest under the trust deed. 2. Nature of the interest (vested or contingent) of the assessee in the corpus of the trust property. Detailed Analysis: Taxability of the Assessee's Interest: The primary issue in this case was whether the assessee's interest under the trust deed could be considered an "asset" within the meaning of section 2(e) of the Wealth-tax Act. The Wealth-tax Officer included the value of the assessee's interest in the net wealth, viewing it as a vested interest. However, the Appellate Assistant Commissioner and the Tribunal disagreed, concluding that the assessee's interest was merely a spes successionis (a chance of obtaining property) and thus not an asset. The Tribunal held that the interest was non-transferable under section 6(a) of the Transfer of Property Act and had no realizable value. Upon review, the court clarified that even if the interest was contingent on the assessee surviving the settlor, it would still be a contingent interest and not a spes successionis. A contingent interest is a form of property that is transferable and can be valued, unlike a spes successionis. Therefore, the court held that the assessee's interest, being a contingent interest, was indeed an "asset" under section 2(e) of the Wealth-tax Act. The first question was thus answered against the assessee. Nature of the Interest (Vested or Contingent): The second issue was whether the interest of the assessee in the corpus was vested or contingent. The court examined the trust deed, particularly clauses 1, 2, and 3. Clause 1 stipulated that the trust property would vest in the assessee upon the death of the settlor, provided the assessee survived her. This introduced a contingency, making the interest dependent on the uncertain event of the assessee surviving the settlor. The court emphasized that the language used in the trust deed clearly indicated that the vesting of the trust property was contingent on this event. The court also noted that the rule in Phipps v. Ackers, which might convert a contingent interest into a vested interest under certain conditions, was not applicable in this context. This rule, although a rule of construction in English law, was not adopted in Indian law. Moreover, even if applied, it would not change the nature of the interest in this case due to the specific contingencies outlined in the trust deed. The court concluded that the interest of the assessee in the corpus was a contingent interest, not a vested interest. The second question was thus answered by stating that the assessee had a contingent interest in the corpus. Conclusion: The court's judgment clarified that the assessee's interest under the trust deed was indeed an "asset" under section 2(e) of the Wealth-tax Act, and this interest was contingent, not vested. The answers to the reframed questions were: 1. In the affirmative. 2. The assessee had a contingent interest in the corpus.
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