1971 (5) TMI 7 - HC - Income Tax

Estate Duty Act, 1953 - estate duty assessment of the estate of deceased - property passing on death - father of the deceased had created a trust by which the properties were vested in trustees absolutely for the worship of idols - validity of trust - Whether the properties comprised in the trusts were correctly included in the estate of the deceased as property passing on his death under section 5

Summary

Issues Involved:
1. Validity of the inclusion of properties from the "Jagadhatri Sampad Trust" in the estate of the deceased under section 5 of the Estate Duty Act, 1953.

Issue-wise Detailed Analysis:

1. Validity of the Inclusion of Properties from the "Jagadhatri Sampad Trust" in the Estate of the Deceased:

The primary issue was whether the properties comprised in the "Jagadhatri Sampad Trust" were correctly included in the estate of the deceased as property passing on his death under section 5 of the Estate Duty Act, 1953. The Deputy Controller of Estate Duty included the value of the properties in the trust in the principal value of the estate, asserting that the trust was void as it tied up properties in perpetuity without public or charitable purpose. Consequently, the deceased, being the sole heir, became entitled to the properties, thus making them part of the estate.

The Board of Revenue upheld this view, stating that the trust was intended not only for worship of deities but also for the secular expenses of family members and future heirs, making it a permanent endowment for descendants, which is void in law.

However, the court disagreed with this interpretation. It emphasized that if a valid trust was created by the deceased's father, the question of any property passing on the death of the deceased would not arise (section 22 of the Act). The court examined the trust deed and concluded that the deceased's father had created a trust by which the properties were vested in trustees absolutely and irrevocably for the worship of idols and other purposes. The dominant intention was to provide for the deities, making the trust valid despite some objects potentially being unfulfillable.

The court referenced several cases to support its conclusion, including:
- Sonatun Bysack v. Sreemutty Jaggulsoondree Dosee: Highlighted the principle that the intention of the settlor must be ascertained from the deed as a whole.
- Ashutosh Dutt v. Doorga Churn Chatterjee: Discussed the relevance of surplus income and its use by family members.
- Chundramoney Dossee v. Motilal Mullick: Addressed the void nature of perpetual trusts for family benefit.
- Har Narayan v. Surja Kunwari: Emphasized the need to consider the will as a whole to determine the nature of dedication.
- Jadu Nath Singh v. Thakur Sita Ramj: Validated a deed that dedicated property to a temple, with subsequent clauses providing for family members.

The court concluded that the properties in the "Jagadhatri Sampad Trust" were not correctly included in the estate of the deceased as property passing on his death under section 5 of the Act. The trust was valid, and no estate duty was attracted to the properties on the death of the deceased.

Conclusion:
The court held that the properties comprised in the "Jagadhatri Sampad Trust" were not correctly included in the estate of the deceased under section 5 of the Estate Duty Act, 1953. Each party was ordered to bear its own costs.