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TMI Blog1967 (11) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... such part thereof as shall not consist of money and out of the net proceeds of sale and any other money belonging to my estate to pay my funeral and testamentary expenses and debts and the legacies bequeathed by this my will or any codicil hereto and to stand possessed of the said residuary trust moneys and the investments for the time being representing the same (hereinafter called " the residuary trust funds "). Upon the trusts following (that is to say) : In trust either to purchase investments of the nature hereinafter authorised of the market value exclusive of all expenses of investment at the date of such investment of rupees seven lakhs or to set aside out of my residuary estate securities or property of the value in the opinion of my trustees at the date of such setting aside of rupees seven lakhs but so that such securities or property shall yield at least an income of six per cent. per annum and to pay the income arising therefrom to my wife so long as she shall remain my widow and if she shall marry again then from and after her second marriage in trust to set aside out of the said fund of rupees seven lakhs investments sufficient at the time to produce by the annual in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in equal shares and if there shall be one such child the whole to be in trust for that one child but so nevertheless that no child who shall take a share under any such appointment shall (in the absence of appointment to the contrary) take any part of the trust funds remaining unappointed without bringing the share appointed to him or her into hotchpot and accounting for the same accordingly and in case there shall be no child who being male shall attain the age of eighteen years or being female shall attain that age or marry in trust for my other children living at my death and the children of my deceased child of mine per stirpes and not per capita in equal shares upon the trusts and subject to the powers and provisions herein declared in their favour and so that such shares shall be added to their respective original shares in the residuary trust funds and shall follow the destination of such original share. (10) Provided always and I hereby declare that in case any of my children shall act in such manner that my said wife or after her death my trustees shall consider it advisable or expedient to cut off and deprive such child of his or her life interest in a share of my res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the wealth, under section 2(e)(iv) of the Wealth-tax Act. The Appellate Assistant Commissioner negatived the contention with the following observation : Now, on reading the terms of clause 9 of the said will, it would be clear that the appellant had a power of appointment vested in her to bequeath the appropriate share in the trust funds to any of her children. This alone would negative the appellant's contention that her interest in the said trust funds was merely in the nature of annuity or life interest. When a person has a power of appointment in respect of certain trust properties, it could not be said that she had only a life interest in the income of the trust or that she had an annuity for life. She could by will dispose of the said share in the trust funds to any of her children and as such her rights in the property of the trust were co-extensive with the legal and equitable ownership of the appropriate funds. " In the view that he took, the Appellate Assistant Commissioner dismissed the appeal. The assessee thereupon appealed before the Appellate Tribunal. The Tribunal allowed the appeal with the following observation : " In view of the fact that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2(c) : " ' assessee' means a person by whom wealth-tax or any other sum of money is payable under this Act. " " Assets " have not been defined comprehensively under the Act but, under section 2(e) : " 'assets' includes property of every description, movable or immovable but does not include... (iv) a right to any annuit in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant ; . . . " " Net wealth ", under section 2(m) means " the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than--- (i) debts which under section 6 are not to be taken into account; (ii) debts which are secured on, or which have been incurred in relation to, any property in respect of which wealth-tax is not chargeable under this Act; and (iii) the amount of any tax penalty or interest payable in consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty." Also in the same volume in article 321, it appears : An annuity is a sum of money payable yearly or at any rate periodically, from a source which is exclusively or at any rate primarily personal estate. " Thus, in legal parlance annuity means a fixed sum of money payable yearly or periodically while in popular sense it may also mean a yearly or periodical allowance which need not be a fixed sum. We have next to see in which of the two senses, the word " annuity has been used in the Wealth-tax Act. According to Craies on Statute Law (5th edition), at page 153: " There are two rules as to the way in which terms and expressions are to be construed when used in an Act of Parliament. The first rule is that general statutes should prima facie be presumed to use words in their popular sense." At page 155, the learned author further says : " The second rule is that if the statute is one passed with reference to a particular trade, business or transaction, words are used therein which everybody conversant with that trade, business or transaction knows and understands to have a particular meaning in it, the words are to be construed as having that particular meaning which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i, as also to the other beneficiaries was to be made in a different manner. The wakif was to get for the term of his life 1/5th of the net income of the property by monthly instalments, his sons were each to get 1/6th of the net income for their lives respectively and the wife was to get 1/10th of the net income. The question arose whether wealth-tax could be levied in respect of the assessee's right to receive a definite share in the net income of the wakf property. In answering the question against the assessee, G. K. Mitter J. (Masud J. agreeing) observed : " The right of the assessee in this case is to receive an aliquot share of the net income of the properties which were made the subject-matter of the wakf. That there is a clear distinction between an aliquot share of income and an annuity is illustrated by the observations of the Court of Appeal in England in the case of In re Duke of Norfolk : Public Trustee v. Inland Revenue Commissioners , where a question arose in respect of estate duty payable in the case of grant of an annuity to A and after his death, to B. Referring to the cases of In re Northcliffe and Christie v. Lord Advocate , Evershed M. R. said : ' Both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed by the testament consisting of his properties, not otherwise " disposed of " or bequeathed under the will, with direction to the trustees to invest rupees seven lakhs out of that in securities and pay the income therefrom to his widow so long as she did not marry again and thereafter to set aside so much out of the said securities as would yield an income of Rs. 6,000 annually and to pay Rs. 500 per month to her for the remainder of her life. The remainder of the residuary trust fund, including the balance of the securities hereinbefore mentioned, if any, were directed to be held upon trust to divide the same into as many equal shares as the testator had children surviving him so that for the purposes of such division all the children of each deceased child of the testator shall represent and be entitled to one such equal share. There were the following further directions upon the trustees of the fund : (a) to apply the income or so much thereof as may be necessary of one of such shares for the support and maintenance of each of the children of the testator until such child would attain the age of twenty-one years or if a daughter would marry under that age; (b) on the happ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneficiaries. The trustees are hereby authorised to invest such unused or accumulated funds from the profits in any security or concern as they may deem fit and proper ..... 4. If and when each of the said beneficiaries completes the age of 25 years the trustees shall transfer out of the said 160 shares his portion of the shares and the accumulation thereof or any other investment in lieu thereof.... 5. The said beneficiaries shall not have any right to mortgage or create any incumbrance of any description or sell the same until each of them completes the age of twenty five years ..... 7. In the event of the said beneficiaries or any of them shall die before completing the age of twenty-five years without leaving any male issue, the trustees shall stand possessed of the said shares in trust for the other, then living sons of the said Rambhai Somabhai Patel in equal shares after making the following provision ....... The question that came up for consideration was : " Whether, on the facts and in the circumstances of the case, the inclusion in the estate of the deceased of the amount of Rs. 10,43,050 being the trust fund was justifiable in law? " The Supreme Court, in co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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