TRUSTEES OF WEDDING GIFTS TRUST OF HEH THE NIZAMS TWO GRAND DAUGHTERS Vs. WEALTH TAX OFFICER
LAWS(IT)-1989-3-7
INCOME TAX APPELLATE TRIBUNAL
Decided on March 17,1989

Appellant
VERSUS
Respondents

JUDGEMENT

Sri T.V.Rajagopala Rao, Judicial Member - These are assessees appeals for 1976-77 to 1980-81. As common points are involved in these appeals they can be taken up together and disposed of by a common order. These appeals arise out of the order of the Commissioner of Wealth-tax (Appeals)-I, Hyderabad dated 29-1-1988 for assessment years 1976-77 to 1978-79 and the separate common order dated 29-1-1988 passed by the Commissioner of Wealth-tax (Appeals)-I, Hyderabad for assessment years 1979-80 and 1980-81. - (1.)
(2.)The appellant in these appeals is "Trustees of Wedding Gifts Trust of HEH the Nazams Two Grand-daughters representing Sb. Fatima Fouzia Fund". Firstly the reopening done by the Wealth-tax Officer by issuing notice under section 17 of the Wealth-tax Act was challenged as illegal. Secondly the finding of the Commissioner of Wealth-tax (Appeals) that the right to wear jewellery given to the two grand-daughters-one among whom is Sb. Fatima Fouzia, can be considered to be an asset assessable to wealth-tax within the meaning of section 2(e) of the Wealth-tax Act is contested. It is also contended that whether sec. 21(1) can be resorted to against the Trustee without specifying all the names of the beneficiaries and their respective interest in the Trust. It is also challenged that the value of the jewellery of Rs. 14,35,545 is assessable in the hands of Trustees in the representative character under sec. 21(1) of the Wealth-tax Act. Nextly it is contended that the decision of the Andhra Pradesh High Court in the case of CWT v. Trustees of H. E. H. the Nizams Sahebzadi Anwar Begum Trust [1981] 129 ITR 796 can at all be applicable to the facts of the present case.
We have heard Sri. P. Muralikrishna, learned counsel for the assessee and Sri. K. K. Viswanatham, learned D. R. for the department. For assessment years 1976-77 to 1978-79 returns were filed by the assessee on 24-12-1979 disclosing nil wealth. Subsequently on 13/15-2-1984 sec. 17 notice was issued by the Wealth-tax Officer, in pursuance of which again nil return was filed on behalf of the assessee on 9-3-1984. It was contended that either Sb. Fatima Fouzia Begum or So. Amina Marzia were ever personally assessed for the same wealth in the same assessment years viz., 1976-77 to 1978-79. The CWT (A) in his common orders disposing of the appeals for 1976-77 to 1978-79 specifically found the following at para 2.2 of his impugned orders dated 19-9-1988 : "It is contended before me that the W. T. O. had already assessed the beneficiaries directly in respect of the jewellery and as such the present impugned assessments on the trustees were not valid. A perusal of the records of both the beneficiaries viz., Fatima Fouzia and Sb. Amina Marzia does not indicate that any such assessment was made." Therefore, it was contended that the argument of the learned counsel for the assessee that for the same assessment years the interest of the two beneficiaries Fatima Fouzia and Amina Marzia in this Trust were assessed in their individual hands u/s 21(2) of the Wealth-tax Act is factually not correct. In fact the learned Departmental Representative heavily relied on CWT (A)s order dated 29-1-1988 in which the decision of the A. P. High Court in Trustees of H. E. H. the Nizams Sahebzadi Anwar Begum, Trusts case (supra) was held fully applicable. The learned CWT (A) had taken the fact of Andhra Pradesh High Court distinguishing the decision of another Bench of the same High Court in RC No. 67 of 1969 dated 5-11-1971 and while distinguishing the Andhra Pradesh High Court held as follows : "At this stage a decision in RC No. 67 of 1969 of this Court was brought to our notice by the learned counsel for the respondent. The said decision deals with the interest in share fund and the jewellery. Therein it was held that the right to use jewels does not constitute an asset within the meaning of section 2(e) of the Wealth-tax Act. In the present case, the point was that arose for consideration was whether the jewellery fund is liable to be assessed under section 21(1) of the WT Act. In RC No. 67 of 1969, this aspect was not under consideration but was confined to the pointed whether the mere wearing of the jewellery constitutes an asset. Taking into consideration the terms of the trust deed in the instant case, we are of the view that the jewellery fund is liable to be taxed under section 21(1) of the WT Act." It us argued that the learned CWT (A) held that the appellants interest in the jewellery in the relevant schedule is of a similar character to that enjoyed by Smt. Anwar Begum in respect of jewellery in Part-I of the Trust Deed, in her case and that the value of such jewellery is assessable u/s 21(1) in the hands of the trustees. Therefore according to the learned D. R., the order of the CWT (A) is perfectly justified and does not call for any interference from this Tribunal.

(3.)FIRSTLY let us take up for consideration the question whether the Andhra Pradesh High Court decision in Trustees of H. E. H. the Nizams Sahebzadi Anwar Begum Trusts case (supra) actually applied to the facts of this case. Before deciding this question let us consider the terms of the Trust Deed executed by the Ex-Nizam of Hyderabad on 4-9-1951 under which he made his two grand-daughters Sb. Fatima Fouzia and Amina Marzia and their children after their marriage, beneficiaries under the Trust. Sb. Fatima Fouzia and Amina Marzia were two daughters of the second son of the settlor. The first and second schedules to the Trust Deed consisted of a complete set of ladies jewellery of oriental type. Para 2 of the Trust Deed is as follows : "The Trust hereby created shall be called The Wedding Gifts Trust of H. E. H. the Nizams Two Grant-Daughters." Para 3 of the Trust Deed is as follows : "(a) ** ** ** (b) ** ** ** (c) On the marriage of the said Fatima Fouzia to give the articles of jewellery specified in the First Schedule hereunder written to the said Fatima Fouzia as wedding gift to her from the Settlor along with other jewellery which may be given to her on the occasion provided, however, that soon after the ceremonies and festivities in respect of the wedding of the said Fatima Fouzia shall be over, she shall return and hand over to the Trustees all the said articles of jewellery specified in the First Schedule hereunder written and thereafter the Trustees shall hold the same UPON TRUST to allow the said Fatima Fouzia to wear and use the said articles of jewellery or such of them as may be required on and for the purpose of any special ceremonial or festive occasion and after any such ceremonial or festive occasion shall be over to take charge of such articles from the said Fatima Fouzia PROVIDED ALWAYS that the Trustees shall not be liable or held responsible in any manner whatsoever by any person whomsoever for any loss or damage that may be caused to or in respect of any of the said articles in the course of the removal or transit of any of the said articles for the purposes aforesaid or for any other consequences resulting from the action of the Trustees in allowing the said articles or any of them to be worn or used as aforesaid." It is also stated in the trust deed in para 3(d) that after the death of Fatima Fouzia the trustee shall hold the jewellery as per the directions given in clause 4 of the trust deed. Clause 4 of the trust deed is as follows : "On the death of the said Fatima Fouzia the Trustees shall hold the said articles of jewellery specified in the First Schedule hereunder Written (hereinafter called Fatima Fouzias Jewellery fund) UPON TRUST to divide the same amongst her children and/or remoter issue then living per stirpes in the proportion of two-shares for every male child or remoter issue of hers standing in the same degree of relationship and so that no person shall take whose parent entitled to a share under this clause shall be living and further so that persons standing in the same degree of relationship shall take between themselves in the same proportion as above the share which their parent would have take if then living Provided, however, that if the said Fatima Fouzia shall die without leaving any child or remoter issue her surviving then the Trustees shall hold Fatima Fouzias Jewellery Fund UPON TRUST for the Nizam of Hyderabad who may be surviving at the date of the death of the said Fatima Fouzia in order to enable him to meet the essential expenditure for the management of the Sarf-e-khas for which he will be responsible as the Head of the Family of the Settlor shall come to an end for any reason whatsoever and there shall be no Nizam of Hyderabad existing at the date of the death of the said Fatima Fouzia then the Trustees shall in the event aforesaid hand over and transfer Fatima Fouzias jewellery Fund to the eldest male descendant in the direct male line of succession of the Settlor according to the law of primogeniture then living in order to enable him as the Head of the Family of the Settlor to maintain the dignity of the House of Asaf Jah to which the Settlor belongs and the status and position of the various members of his family." Therefore, the above clauses in the settlement deed clearly show that Sb. Fatima Fouzia is entitled only to wear the jewellery in the first schedule on her marriage and other ceremonial occasions and as soon as the occasions come to a close the trustees are directed to take possession of the jewellery and keep them. Sb. Fatima Fouzia had to enjoy the right of wearing the jewellery on ceremonial occasions etc. only during her lifetime. After her death the vested remainder right in the corpus of the jewellery is given to her children and other as stipulated under para 4 of the settlement deed extracted above.


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