Law:

Section:

Section 2(e) of the Wealth-tax Act, 1957-Assets-Beneficiary's interest in corpus-Settlor had settled trust for minor-assessee's benefit-Trust deed provided, inter alia, that assessee would get net income of trust till he became 27 years old and entire remaining corpus thereafter and that till then trustees had absolute discretion to expend money out of corpus of trust fund for assessee's benefit-WTO included entire corpus of trust fund in assessee's net wealth-Whether tribunal correct in holding that assessee had merely a contingent interest in corpus of trust fund and thus entire value of corpus could not be included in assessee's net wealth-Held, on facts, yes Facts The, grandfather of the assessee had settled a trust for the benefit of the assessee. The trust deed provided, inter alia, (i )that the assessee would be entitled to get the net income of the trust fund till he became twenty-seven years old, whereafter the entire corpus of the remaining trust fund was to be transferred to the assessee; and (ii) that until the assessee attained the age of twenty-seven years, the trustees would be entitled to pay to the assessee, or to expend or utilise on his behalf in any business in which the assessee might be interested, or for his marriage, or otherwise howsoever for the benefit of the assessee such amounts out of the trust fund as they might in their absolute discretion consider fit and proper. For the assessment years 1965-66 to 1967-68, the WTO included the entire corpus of the trust fund in the computation of the net wealth of the assessee, which was sustained by the AAC. On second appeal, the Tribunal pointed out that until the assessee completed the age of twenty-seven years, it was in the absolute discretion of the trustees to expend such part of the corpus as they thought fit for the purposes stated in the trust deed and that the only right of the assessee in the corpus of the trust fund during the relevant assessment years was the contingent right to receive the corpus or such part thereof as remained on his completing the age of twenty-seven years. It, therefore, held that although the said contingent right of the income was liable to be valued and…

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