- (1.) This appeal by certificate arises out of the wealth-tax assessment of the assessee-respondent, an individual, for the year 1959-60 the corresponding valuation date being 31/03/1959. The assessed is the wife of Maharaja of Jaipur. On 9/09/1953, the Maharaja made a settlement at London. Under the deed of settlement, he appointed sir Harold Augustus Warner as the trustee of the property detailed in the deed of settlement. The settlement is an irrevocable one and the properties mentioned in the schedule to the trust deed stood transferred to the name of the trustee, The trust deed provides that the trustee should pay to the assessee during her life time 50 per cent of the income of the trust fund. The question arose whether the assessee can be held to have any share in the corpus of the trust and whether the same can be brought to tax under the provisions of the Wealth Tax Act, 1957 (to be hereinafter referred to as the act) , The Wealth Tax Officer came to the conclusion that the assessee's interest in U. K. Trust amounting to Rs. 15,75,694. 00 plus the income-tax reserve thereon Rs. 1,75,401. 00 have to be included in the assessee's total wealth. This decision was confirmed by the Appellate Assistant Commissioner in appeal. Thereafter the assessee took up the matter in second appeal to the Income-tax Appellate tribunal. The tribunal for reasons set oat in paragraphs 6 to 10, 12 and 13 of its order held that the assessee did not get any life interest in the corpus but it held that her interest was aninterest which was an asset under the Act but for S. 2 (e) (iv) of the act. In other words, it held that the assessee had only a right to get annuity from out of, the trust fund and such her right is exempt from wealth tax in view of S. 2 (e) (iv) of the Act. In the view it took, the tribunal considered that it was not necessary to ascertain the proper and correct method of valuation of the assessee's right. It directed that if and when its conclusion on the interpretation of the clauses were set aside, the appeal should be posted again before it for further hearing for ascertaining the correct method of valuation. At the instance of the Department, the tribunal stated the case and referred the following two questions to the High court of Rajasthan for its opinion: "(1) Whether on a proper construction of the deed of settlement the assessee has any interest in the corpus of the deed of settlement. (2) Whether in the facts and circumstances of this case, the right of the assessee derived under the deed of settlement is exempt from wealth-tax by virtue of the provisions of S. 2 (e) (iv) of the Act. "
(2.) A division bench of that High court answered the first question in the negative and the second question in the affirmative both against the department. The High court held- (1) That the assessee was not given any interest in the corpus of the property; (2) That the income that the assessee was receiving on account of the 15/30 parts of the trust fund was in the nature of an annuity, and (3) That the terms and conditions relating to the assessee's right to annuity preclude commutation of any portion thereof into a lump sum grant.
(3.) The only question that arises for decision in this appeal is whether the share of income to which the assessee is entitled to receive under the trust deed executed by her husband can be considered as annuity within the meaning of that expression in S. 2 (e) (iv). If it is considered as an annuity, there is no dispute that the terms and conditions relating to the assessee's right relating to annuity precluded commutation of any part thereof into a lump sum grant. Therefore all that we have to see is whether the income received by the assessee was an annuity or an aliquot share in the income arising from the fund. As seen earlier, the High court has taken the view that the income in question was an annuity. In arriving at that conclusion, it has referred to various decisions of the English courts as well as the courts in this country. But in view of the two recent decisions of this court, it is not necessary for us to examine those decisions.;