COMMISSIONER OF WEALTH TAX Vs. PETIT N D

JUDGEMENT

(1.) THE assessee in this case is the eldest son of Sir D. M. Petit, the third Baronet. The Baronetcy in question is governed by Sir Dinshaw Maneckjee Petit Baronetcy Act (No. 6 of 1893) passed by the Governor General -in -Council. A trust known as Sir D. M. Petit Baronetcy Trust was created on March 9, 1893, under the said Act by Sir D. M. Petit, the first Baronet. The material provisions of the Baronetcy Act are to be found in s. 2 and s.3 of the Act. The preamble of the Act provides that the trust has been created; 'To accompany and support the title and dignity of a Baronet lately conferred by Her Majesty Queen Victoria on him for an during the term of his natural life, and from and immediately after his decease to hold to his second son, Framjee Dinshaw Petit, Esquire and the heirs made of his body lawfully begotten, and in default of such issue with remainder to the heirs made of the body of the said Sir Dinshaw Maneckjee Petit.'

(2.) SECTION 2 and 3 of the Act read as follows : '2. The said Framjee Dinshaw Petit and the heirs male of his body and all other heirs made of the body of the said Sir Dinshaw Maneckjee Petit to whom the said title and dignity shall descend, pursuant to the limitations of the patent whereby the said dignity was granted, shall take upon themselves respectively the names of 'Dinshaw Maneckjee Petit' in lieu and in the place of any other name of names whatever, and the said Framjee Dinshaw Petit and also such heirs made of his body and all such other the heirs male of the said Sir Dinshaw Maneckjee Petit severally and successively, shall be called by the names of 'Dinshaw Maneckjee Petit.' '3. To pay and apply the dividends, interest and annual income of the said bonds, stocks, funds and securities up to and for the benefit of the said Sir Dinshaw Maneckjee Petit during his natural life, and from and immediately after his decease for the benefit of the said Framjee Dinshaw Petit if he shall survive the said Dinshaw Maneckjee Petit during his natural life, and from the immediately after, the death of the survivor of them the said Sir Dinshaw Maneckjee Petit and Framjee Dinshaw Petit for the benefit of the person who, as heir male of the body of the said Framjee Dinshaw Petit or of the said Sir Dinshaw Maneckjee Petit as the case may be shall for the time being have succeeded to and be in the enjoyment of the title of Baronet conferred by the said letters patent as aforesaid, notwithstanding any rule of law or equity to the contrary.' Section 6 of the said Act related to the devolution of interest where the beneficiary refuses, neglects or discontinues to use the names Dinshaw Maneckjee Petit. Under that provision, it was provided that in case any person to whom for the time being the said title of Baronet shall have descended, refuses or neglects to use the names of Dinshaw Maneckjee Petit for the space of one whole year after he attains the age of 21 years or in case any such person having used those names shall, for the space of 6 months thereafter, discontinue to use such names then the estate or interest in the trust fund are to stand suspended and during any end every such suspension, the dividends, interest and income, etc., shall devolve and belong to the person, who, as the sole heir of Framjee Dinshaw Petit or Sir Dinshaw Maneckjee Petit, as the case may be, would have succeeded to and been in the enjoyment of the title of Baronet conferred by the same Letters Patent 'in case the person so refusing or neglecting to use or discontinuing to us the said names of Dinshaw Maneckjee Petit had departed this life.'

(3.) THE revenue challenged this order of the AAC. One of the grounds raised in appeal before the Tribunal on behalf of the revenue was that the AAC was in error in holding that the assessee's life interest in the Baronetcy itself was only a spes successionis and that the said life interest had no value. The Tribunal in a very well considered order took the view that the prospects of the assessee becoming a Baronet on the death of the present Baronet wholly depended upon his chance of surviving the present Baronet and even if he survived the present Baronet, he could not acquire the dignity and title of Baronet or could not retain it if he was not agreeable to adopt the names of D. M. Petit. The Tribunal took the view that the Act of 1893 did not refer to the assessee by name as a successor to derive income of the trust and the assessee could only hope to acquire the right to the income of the trust only if he happens to be heir of the present Baronet at the time of his death. The Tribunal, therefore, took the view that the Act chalked out a line of succession to the income of the trust and this was a case of spes successionis and not a contingent interest, much less, a vested interest. Therefore, the Tribunal took the view that the question of including the value of the so -called future right to the whole of the income of the trust did not arise in the present case. Arising out of this order of the Tribunal, the following question has been refereed to this court under s. 27(1) of the W.T. Act at the instance of the revenue : 'Whether the assessee's prospect of becoming a Baronet on the death of the present Baronet was a spes successionis ?'