CONTROLLER OF ESTATE DUTY Vs. MANGALA SMT

JUDGEMENT

(1.) A trust for a charitable purpose has been created by members of Kale family at. Nagpur and the settlors shown in the trust deed dt. 30th June, 1950 (annex. A to the statement of the case), were : (1) Shri Purushottam Balkrishna Kale, (2) Smt. Anasuyabai Purushottam Kale (husband and wife), and (3) Shri Kashinath Purushottam Kale, and (4) Shri Balkrishna Purushottam Kale, who were the sons of the first two settlors. One of the properties settled on trust is known as "Kale Bhawan", the value of which was shown in the trust deed at Rs. 2,74,000 and belonged exclusively to settlor No. 3, Shri Kashinath Purushottam Kale, who died on 18th Oct., 1959. The respondent in this reference is the accountable person, being the widow of the deceased, Shri K. P. Kale. It is not necessary to refer in detail to the charitable purposes for which the trust was created because it has now been found as a fact by the Tribunal that the trust is a public trust for a charitable purpose. The surplus income of the trust properties was to be utilised for charities which according to the trust would include" donations to erect funds for scholarships, prizes, medals, etc.", establishment of technical schools and colleges and other educational institutions and hostels for students of either sex, medical relief of all kinds, help to the destitute and poor and aid for people stricken by calamities such as floods, fire, etc., and no distinction was to be made on the basis of caste, creed or religion in respect of beneficiaries who would benefit by the trust. So far as "Kale Bhawan" is concerned, it appears that the property was transferred to the trust subject to the trust accepting the liability of .Rs. 50,000 which was the encumbrance in the form of a mortgage debt on the said property. The settlors were themselves to be the trustees.

(2.) ONE of the clauses of the trust deed provided that the managing trustee or managing trustees were to be paid "25 per cent. of the trust income as emoluments for him or them for managing the trust property" but at no time the total remuneration of the managing trustee or trustees could be more than Rs. 2,000 per month. cl 11 of the trust deed provided for the first two settlors, namely, Shri Purushottam Balkrishna Kale and Smt. Anasuyabai Kale, to stay free of rent in one of the trust properties, namely, "Anand Bhawan". It would, however, be noted that the trust in respect of this property is not in question in the present proceedings. Smt. Anasuyabai Kale was to be the first trustee for life under cl. 9, or until she resigns or relinquishes her office. cl 19 further provided that if Shri Purushottam Balkrishna Kale survived, any one of the events putting an end to the managing trusteeship of Mrs. Anasuyabai Kale and if he chose to accept the office of the managing trustee, he shall be the second managing trustee for life or until he resigns or relinquishes his office. Then comes cl. 23 on which the Revenue is heavily relying on the applicability of the provisions of S. 12 of the E.D. Act, 1953. It is, therefore, proper to reproduce this clause in full. It reads as follows :

(3.) THE Zonal Appellate CED took the view that on the terms of the trust deed it could not be said that the settlor had reserved any benefit from the estate. It may be mentioned that S. 12 of the E.D. Act, was invoked by the Assistant CED on the ground that the trust was advancing monies out of trust funds to the Provincial Automobile Company Limited., Nagpur, in which the deceased partner was holding 8 annas share. During the lifetime of the deceased one of the trust properties was sold and the sale proceeds were advanced as loans to the wife of the deceased and the trust funds have been invested in various firms in which the deceased was the partner. He bad also taken the view that under cl. 10 of the trust deed, the children of the settlors as well as descendants were also entitled to receive educational scholarships or medical help and marriage bounties and, therefore, the Explanation to S. 12(1) of the E.D. Act was applicable. All the reasons given by the Asst. CED for holding that the deceased had reserved interest in the trust properties were held by the Appellate CED to be not justified. He, therefore, deleted the value of the trust property amounting to Rs. 3,50,000 from the value of the dutiable estate of the deceased.