Law:

Section:

Section 2(e)(1)(v ) of the wealth-tax act, 1957-Assets-Interest in property-Assessee's father created three trusts income of which was to be accumulated for 10 years whereafter trustees would hold corpus and accretions thereto for benefit of assessee absolutely and thereafter for benefit of assessee's sons-Whether value of such interest includible in wealth-tax assessment before expiry of 10 years-Held, on facts, yes Facts The assessee's father created three separate trusts on 31-3-1960, 29-3-1961 and 28-3-1962 in respect of some shares in a private company. The trust deeds provided that the trustees would accumulate the trust income after incurring necessary expenditure on account of taxes and management for a period of 10 years from the date of the trust deeds and thereafter the trustees would hold the corpus, together with accretion thereto, upon trust for the benefit of the assessee absolutely (if he was then alive) or for the benefit of his son (if he was not then alive). In the course of wealth-tax assessments for the assessment years 1960-61, 1961-62 and 1962-63, the WTO held that the assessee had beneficial interest in the corpus of the trusts so that their value was includible in the net wealth of the assessee. The AAC confirmed the assessment, observing (i) that the assessee had the beneficial interest in the three trusts in praesenti enjoyment of which would only take effect after expiry of the period of 10 years; and (ii) that it was not a contingent interest as defined in section 21 of the Transfer of Property Act. On further appeal, the Tribunal also sustained the assessment, holding (i) that the trust created a contingent interest and not a beneficial interest in possession in the corpus and accretion thereto in favour of the assessee because the trustees were to hand over the corpus of the trust fund, including accretion thereto, to the assessee absolutely if he was alive on the expiry of the said period of 10 years; and (ii) that a contingent interest, being property, was included in the definition of "asset" and, as such, chargeable under section 3. On reference, the assessee pleaded (i) that interest in the trust property devolved on him only…

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