Law:

Section:

Section 2(e) of the Wealth-tax Act, 1957 - Assets - Assessment years 1957-58 and 1958-59 - Assessee settled certain Government securities held by him in five trusts, of which he was one of trustees - Assessee himself was to receive income from securities every year during his life time - In event of all beneficiaries predeceasing assessee, without any heir, trustees were to stand possessed of corpus of trusts in trust for assessee - Trust properties were getting a fixed income - Payments received by assessee were also certain amounts and he did not retain for certain any interest in corpus of trust funds and, under no contingencies which were certain to happen there was a possibility either of a variation in amounts of payments to be received by assessee, or assessee or his estate getting an interest in corpus of trust funds - Further terms and conditions relating to annuities created under trust deeds were such that they precluded commutation those of into an lump sum grant - Whether right to payments to be made to assessee as per trust deeds were annuities within meaning of section 2(e)(iv) and, therefore, he could claim exemption from including capital value of these payments in his net wealth - Held, yes FACTS The assessee owned movable and immovable properties. With regard to Government securities the assessee created five different trusts. Under the terms of the trust deeds, the assessee himself was one of the two trustees and was to receive payments every year during his lifetime. According to the terms of the trust deeds, the assessee, reserved to himself the right to direct the change of the investments of the trust properties, and, any change in the investments could also change the yield of income. During the lifetime of the assessee the trustees shall sell the trust properties and re-invest the sale proceeds as the settlor may from time to time in writing direct. In the event of all the beneficiaries pre-deceasing the assessee leaving no heirs, the trustees were to stand possessed of the corpus of the various trusts in trust for the settlor, his heirs etc., and that in such an event the trust properties would form part of the estate of the settlor.…

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