Venkataramiah, J. - (1.) In this appeal by certificate, the question which arises for consideration is whether all or any part of the properties which were the subject matter of a trust can be treated as passing on the death of Panchu Gopal Banerjee (hereinafter referred to as 'the deceased') for purposes of levy of estate duty under the Estate Duty Act,1953 (hereinafter to as 'the Act').
(2.) The deceased was the son of Woomesh Chandra Banerjee. Woomesh Chandra Banerjee executed a deed of trust on June 27, 1939 constituting a trust known as "Sri Sri Iswar Jagadhatri Sampad" and transferred all his properties which were described in the Schedude attached to the deed to the said Trust and appointed himself as the first managing trustee for a period of one year. He directed that after he ceased to be the trustee, his son, the deceased should act as the managing trustee of the trust. On the death of the deceased, the deed directed, that his sons, grand-sons etc. should be appointed as trustees. The deed provided that the properties should belong to the trust and continue to remain with the trust and that none of the heirs of the author of the trust could have the power to deal with them as their own or to alienate. The trust deed provided that out of the income from the trust properties in any year, one fourth thereof should be utilized for payment of taxes in respect of the trust properties and for the expenses of the repairs, partial constructions, additions, alterations and re-constructions of the houses referred to in the Schedule attached to the deed. If there was any surplus remaining in the said one-fourth after paying the taxes and meeting the expenses referred to above, it was open to the trustees to acquire new properties and the properties so acquired should be deemed to be the trust properties. The deed further directed that one-half of the balance i.e. one half of three-fourths of the income should be spent for the sevas of the family deities, performance of certain specified Pujar and sradhas and certain other religious purposes. There was a specific direction that the said portion of the income should be spent entirely on religious work and that at no point of time there should be any departure therefrom. In other words, the trust deed directed that three-eighths of the total income should be spent towards religious and charitable works. The remaining income i.e. three-eighths of the total income was permitted to be used by the trustees and other members of the family. Since one-fourth of the total income which was earmarked for payment of taxes in respect of all the properties and for their repairs etc. and any surplus remaining out of it was to be utilised for acquiring new properties for the trust, the only inference which could be drawn from the reading of the entire deed is that in all one-half of the total income was earmarked for religious purposes and the remaining one-half for the benefit of the trustees and the members of their family.
(3.) Shri Woomesh Chandra Banerjee, the author of the trust deed died in or about the year 1941 and his son, the deceased, became the trustee under the deed of trust. The deceased died on April 17, 1955 and on his death, the question whether the properties which were the subject-matter of the trust should be included in the estate duty passing on his death arose for consideration in the estate duty proceedings. The accountable persons contended before the Deputy Controller of Estate Duty who was the assessing authority that no estate duty was payable in respect of the properties comprised in the trust (valued by the Deputy Controller at Rs. 2,89,000) as the said properties did not pass on the death of the deceased. The Deputy controller held that the provisions of the trust were such as to keep the properties tied up in perpetuity without any power of alienation and that since the purpose for which the trust was created was not a public or charitable one, the trust as a whole was void. He accordingly held that the said properties passed on the death of the deceased under section 5 of the Act. This part of the order of the Deputy Controller was affirmed in appeal by the central Board of Revenue in Estate Duty Appeal No. Cal/134 by its order dated April 3, 1961. The Board held that even though the purpose, of the trust was said to be certain religious purposes, the further directions contained in the deed providing for certain personal expenses of the author of the trust, his heirs who would succeed him as trustees and the members of his family and stipulating that the trustees were not competent to alienate the trust properties led to the inference that the intention of the author executing the deed of trust was "not only to provide for the worship of deities but also for meeting the secular expenses of the family members and future heirs" and that since the turst offended the rule against perpetuities, it was void in law and all the properties comprised in the said trust should be held to pass under Section 5 of the Act.;