CHANDULAL SHIVLAL Vs. COMMISSIONER OF WEALTH TAX
HIGH COURT OF GUJARAT
COMMISSIONER OF WEALTH TAX
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J.M.SHELAT, J. -
(1.) THIS reference relates to the asst. year 1958 59 and the relevant date of valuation is the 31st of
March, 1958. The question referred to us in this reference is whether, on the facts and
circumstances of the case, the inclusion of the sum of Rs. 11,59,137 in the wealth tax assessment
of the assessee by applying S. 4(1)(a)(iii) is right in law.
(2.) THE assessee had two sons, Gunwant and Chaitanya. By a deed of trust dt. 12th Feb., 1957, he transferred certain properties of the value of Rs. 30,13,875 to the three trustees appointed by him
therein to hold the same upon trust therein set out. After reciting the various properties situate in
Ahmedabad and Bombay, which are the subject matter of the deed of trust, the deed, inter alia,
recites as follows :
"And whereas the settlor is desirous of settling the said lands hereditaments and premises more particularly described in the first, second and third schedules hereunder written for the benefit of his sons Gunwant and Chaitanya both minors under the age of eighteen years . . . . in the manner hereinafter appearing . . . . . now this indenture witnesseth that in pursuance of the said desire and in consideration of the premises the settlor doth hereby grant and convey unto the trustees all those pieces or parcels of lands hereditaments and premises more particularly described in the first, second and third schedules hereunder written together with all buildings, yards, fences, etc."
The deed provides that out of these properties, certain properties were to be held by the trustees in the manner provided by cls. 3 and 5 thereof and, in so far as cl. 3 deals with the
assessee's minor son Chaitanya, it is as follows :
"3. The trustees shall hold the said land hereditaments and premises . . . . upon trust to pay the net income of the said several lands hereditaments and premises . . . . to the said Chaitanya for and during his life and on and after the death of the said Chaitanya the trustees shall hold the said several lands hereditaments and premises . . . . in trust absolutely for the child or children of the said Chaitanya and if more than one in equal shares."
Clause 5, inter alia, provides as follows :
"5. If the said Chaitanya shall die without having any child or children at all born to him then and in such case the trustees shall hold the several lands hereditaments and premises hereby settled for the benefit of the said Chaitanya and his child or children in trust to pay the net income thereof to the said Gunwant for and during his life . . . . and on and after the death of the said Gunwant the trustees shall hold the said several lands hereditaments and premises hereby settled for the benefit of the said Chaitanya and his child or children . . . in trust absolutely for the child or children of the said Gunwant."
(3.) THE WTO, by his order dt. 31st of March, 1959, held that the properties covered by the deed of trust were undervalued by the assessee, and valuing them at Rs. 30,13,875, assessed the net
wealth of the assessee at Rs. 35,30,932, ignoring altogether the deed of trust, holding that there
was no transfer thereunder of any of the said properties. Contesting the inclusion of these
properties in his net wealth, the assessee filed an appeal before the Asstt. Commissioner The Asstt.
Commissioner allowed the appeal, directing that these properties should not be included in the
computation of the assessee's net wealth. The Asstt. Commissioner took the view that as the sub
Registrar had not objected to the registration of the trust as also the registration of the immovable
properties referred to therein, the properties, on the date on which the trust deed was registered,
became the properties of the trust and the assessee, therefore, did not have any right over those
properties. He held that as the WTO had not found any difficulties in the trust deed and since the
provisions of the Transfer of Property Act as also the Registration Act had been correctly followed
by the assessee, the properties which were the subject matter of the deed of trust could not be the
properties of the assessee and, therefore, should not be assessed in the hands of the assessee. In
this view, he directed that the addition of those properties in the net wealth of the assessee should
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