Vested beneficial interests in a family trust do not attract estate duty when death only accelerates enjoyment, not ownership.

Estate duty under the Estate Duty Act, 1953 was held not to arise where a supplemental family trust conferred vested beneficial interests on the beneficiaries from inception and the settlor's death merely removed a restriction on immediate enjoyment. The trustees had no power to revoke the trust or divert income, and the settlor had no power to destroy the beneficiaries' interests. Because death did not change beneficial ownership of the corpus, no property passed on death within section 5. Prior interpretation of the same trust deed and authorities on accumulation trusts supported the conclusion that the beneficiaries' rights were determinate and already vested.

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Issues: Whether the corpus of the supplemental family trust or any part thereof passed on the settlor's death so as to attract estate duty under the Estate Duty Act, 1953.

Analysis: The trust deed showed that the beneficiaries had a pre-existing beneficial interest in the trust property, while enjoyment of the income was merely postponed during the settlor's lifetime. The trustees had no power to revoke the trust or divert the income to others, and no clause empowered the settlor to destroy the beneficial interests. The death of the settlor only removed the restriction on immediate enjoyment and did not bring about any change in the beneficial ownership of the corpus. The governing principle is that estate duty is attracted only where there is a change in beneficial interest on death, not where death merely enlarges or accelerates an already vested right. The prior interpretation of the same trust deed in wealth-tax proceedings and the supporting authorities on accumulation trusts reinforced that the beneficiaries' interests were vested and determinate from the inception of the trust.

Conclusion: The corpus did not pass on the settlor's death within the meaning of section 5 of the Estate Duty Act, 1953, and no estate duty was exigible on that basis.

Final Conclusion: The reference was answered in favour of the accountable persons, holding that the trust corpus was not liable to estate duty on the settlor's death.

Ratio Decidendi: Estate duty is chargeable only when death causes a real change in beneficial interest; a mere postponement of enjoyment or removal of a defeasance possibility does not amount to property passing on death where the beneficiaries' interests were already vested.

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