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TMI Blog1994 (7) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of his Maharanis--vide his will dated July 5, 1961, is not excludible from his estate under section 44 of the Estate Duty Act, 1953 (3) Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that, for the purpose of working out the slice of the capital required to produce the annuity of Rs. 1,44,000 under section 7 read with section 40 of the Estate Duty Act, 1953, the income of the trust fund should be taken as 'gross income minus income-tax' ? (4) Whether, on the fact; and in the circumstances of the case, the Tribunal has rightly held that the following amounts could not be taken into consideration in computing the value of the trust fund under section 7 read with section 40 of the Estate Duty Act, 1953 ? (i) Rs. 36,600 as realisable from the Maharani Rameshwarlata Saheba. (ii) Rs. 90,462 on account of the liability of the Maharani Rameshwarlata Saheba for the wealth-tax for the assessment year 1964-65. (iii) Rs. 7,622 on account of cash debit ? (5) Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the liability of the Maharani Rameshwarlata Saheba amounting to Rs. 38,656 was excl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re estate of the Raja was to vest in a board of trustees who were directed to pay a sum of Rs. 20 lakhs to the aforesaid Maharanis out of the capital assets. They were also directed to pay a sum of Rs. 3,000 per mensem to each of the Maharanis after payment of taxes and other public payments out of the corpus itself in case the income was insufficient. After the lifetime of the Raja, the properties were to devolve on the children of the nephews of the deceased in a certain ratio. Shri L. K. Jha, Ex-Chief Justice of this court, was appointed as the sole executor of the will, and he obtained probate of the will in the Calcutta High Court on September 26, 1963, after the death of the Raja on October 1, 1962. Shri L. K. Jha, as an accountable person of the late Raja, filed the return of the estate on January 22, 1963, and declared its principal value at Rs. 2,56,01,235. Later on, he filed a revised return showing the principal value of the said estate at Rs. 2,28,32,600. However, 'the Assistant Controller of Estate Duty estimated the principal value at Rs. 5,50,09,273. At this stage, it may be mentioned that the Maharani died on December 18, 1964. The above are the broad facts relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portion of the capital required to produce the wife's annuity during his lifetime. The court held that the duty was chargeable on the whole property vested in the trustees without any 'slice' deductions. A similar view was taken in Cowley (Earl) v. IRC [1899] AC 198 (HL) and De Trafford v. Attorney-General [1935] AC 280 (HL). In view of these authorities and in the absence of any specific provision of law for the allowance of the deduction claimed by the accountable person, his contention is rejected." Neither learned counsel for the assessee nor learned counsel for the Revenue brought to our notice any other decision except the decisions referred to by the Tribunal as mentioned above. We do not find anything wrong in the approach of the Tribunal nor in applying the ratio referred to in its order. It is not in dispute that the property set apart for yielding an annuity of Rs. 1,44,000 during the lifetime of the Maharani was to revert back to the settlor or his successors on the death of the Maharani. In other words, the corpus in the shape of shares and securities dealt with under the trust deed remained always the property of the settlor, namely, the Raja. Therefore, it cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be taken as 'gross income minus income-tax' ? This question, referred for the opinion of this court at the instance of the Revenue is connected with question No. 1 which was referred for the opinion of this court at the instance of the assessee. We have already held while answering question No. 1 that the proportionate portion of the property required to yield an annuity of Rs. 1,44,000 payable to the Maharani is not excludible from the principal value of the estate of the Raja. The Tribunal has dealt with this question in paragraph 29 of its order which reads as follows : "It is common ground that section 7 read with section 40 applies to this case. Thus, the only question for consideration relates to the determination of the slice of the capital required to produce the annuity payable to the Maharani Rameshwarlata Saheba. On this point, we may rely upon the authority cited as Ld. Adv. v. Fothrighan [1924] SC 52 referred to at page 455 of the Law and Practice of Estate Duty by V. Balasubramaniam (1968 edition). It was held in this case that in applying similar section to the cessor of an annuity charged on land the word 'income would mean beneficial income' i.e., the net i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und which produced the annuity. We do not, therefore, find any force in these claims of the assessee. The same are, therefore, rejected. " Even before us, no attempt was made to give details of the items in question and no attempt was also made to explain as to how these amounts are liable to be taken into consideration in computing the value of the trust fund or the slice of the trust fund which produced the annuity. Accordingly, we have no good reason to interfere with the conclusion reached by the Tribunal and consequently we answer this question also in the affirmative and against the assessee. For the sake of convenience, question No. 5 is reproduced : " Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the liability of the Maharani Rameshwarlata Saheba amounting to Rs. 38,656 was excludible from the principal value of her estate ?" The Tribunal has dealt with this aspect at paragraphs 39 and 40 of its order, which read as follows : " It appears from the record that the executor had advanced some money to Maharani Rameshwarlata Saheba and the outstanding dues amounted to Rs. 38,656 on her death. The Appellate Controller of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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