Law:

Section:

Section 12, read with section 6, of the Estate Duty Act, 1953 - Settlement with reservation - Whether where a settlor is one of objects of discretionary trust and trustees are given absolute discretion to pay income of settled properties to one or more of objects to exclusion of others, settlor has an interest in settled properties within meaning of section 12(1) and he must be held to have reserved to himself an interest in settled properties for life sufficient to bring his case within section 12(1) - Held, yes - Deceased alongwith his wife settled certain properties in a trust and they were appointed as trustees - As per settlement trustees were to apply income for maintenance and personal support of deceased, his wife and children and issues of sons in such a manner as trustees may think proper - Trustees at direction of deceased can pay such sums for meeting expenses of illness, treatment, education etc. for his family member - Whether on facts it could be said that interest in settled properties for life was reserved to deceased under settlement, and therefore, section 12(1) applied and as such value of properties settled by deceased was liable to be included in estate of deceased - Held, yes - Whether value of property settled by his wife was not liable to be included in estate of deceased as property deemed to pass on his death either under section 6 or section 12 - Held, yes FACTS The deceased settled certain amount in cash and insurance policies on his life and his wife 'B' brought in certain amount in cash belonging to her in the settlement. The deceased and 'B' were appointed trustees and the settlement declared that the trustees would hold the trust funds upon the trusts and subject to the powers, provisions, declarations and agreements contained in the settlement. Clause 3 of the settlement provided that the trustees would apply the net income for and towards the maintenance and personal support of the first settlor, the second settlor, the children of the first settlor and the widow and issues if any of the sons if any of the first settlor in such manner and if more than one in such shares and proportions as the trustees may from time to time…

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