Trust for unborn beneficiary upheld where the beneficiary was identified with certainty and the entire interest was dedicated to that person.

A trust created for the benefit of an unborn person is valid where the beneficiary is identified with reasonable certainty, such as by description as the first son of a named person, and the trust deed shows an intention to dedicate the entire remaining interest to that beneficiary. Section 13 of the Transfer of Property Act permits such a future interest for a person not in existence at the date of transfer, provided the whole remaining interest is devoted to that benefit. The trust mechanism is a recognised mode of holding property for an unborn beneficiary, so the trust was upheld and the reference answered in favour of the assessee.

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Issues: Whether a trust created for the benefit of a beneficiary not yet in existence, described as the first son of a named person, was a valid trust.

Analysis: A valid trust requires certainty of intention, purpose, beneficiaries, trust property, and transfer of property. The beneficiary here was not indefinite or unknown, since the trust deed identified the beneficiary by description. Section 13 of the Transfer of Property Act, 1882 permits creation of an interest for the benefit of a person not in existence at the date of transfer, provided the whole remaining interest is devoted to that benefit. The transfer in question was structured through a trust, which is a recognised mechanism for holding property for the benefit of an unborn person, and the entire interest was intended to enure to the child to be born.

Conclusion: The trust was valid and the reference question was answered in the affirmative, in favour of the assessee and against the Revenue.

Ratio Decidendi: A trust for the benefit of an unborn person is valid where the beneficiary is identified with reasonable certainty and the entire remaining interest is effectively dedicated to that beneficiary through the trust mechanism.

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