Public charitable trust property escapes estate duty where revocation clause is legally ineffective and no beneficial interest is reserved.

In a completed public charitable dedication, trust property is not brought into the dutiable estate merely because the deed contains management or revocation language. Remuneration for a managing trustee does not amount to a reserved beneficial interest, and a clause purporting to revoke a public charitable trust is legally ineffective because such a trust cannot be revoked once validly dedicated to charity. The Indian Trusts Act does not govern public or charitable endowments, and the Bombay Public Trusts Act supports that position. Accordingly, an invalid power of revocation cannot attract estate duty under section 12(1) of the Estate Duty Act.

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Issues: Whether the value of the trust property known as Kale Bhawan was includible in the dutiable estate of the deceased under section 12(1) of the Estate Duty Act, 1953, on the footing that the trust deed reserved an interest or a power of revocation in favour of the settlor.

Analysis: Clause 6, which provided remuneration to the managing trustee, did not amount to a reservation of beneficial interest, because a settlor may validly provide for management of the trust and for remuneration of a trustee acting in that capacity. Clause 23, though couched as a power to dissolve or revoke the trust, could not assist the Revenue because the trust was a public charitable trust and, once validly dedicated to charity, the settlor had no legal power to revoke it. The provisions of the Indian Trusts Act, 1882, did not apply to public or charitable endowments, and the scheme of the Bombay Public Trusts Act reinforced the conclusion that the trust could not be undone by the settlors. A power of revocation which is invalid in law cannot attract section 12(1).

Conclusion: The property was not includible in the dutiable estate under section 12(1), and the answer was in favour of the accountable person and against the Revenue.

Ratio Decidendi: In the case of a completed public charitable dedication, an invalid or legally inoperative reservation of revocation does not constitute a reserved interest or power to reclaim property for the purposes of estate duty.

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