Trust property and estate duty: no reservation of interest or settlor revocation power found in the deed.

Property settled under a trust deed was held outside the deceased settlor's estate because the original settlement did not reserve a beneficial interest or an express power of revocation in the settlor. The trust deeds were construed together, but later rectification or supplementary deeds executed by the trustees could not enlarge the settlor's authority beyond the original instrument. Charges for maintenance of family members and other payments from trust property did not amount to a reservation of interest under section 12(1) of the Estate Duty Act, and the trust was not revocable within the meaning of section 78 of the Indian Trusts Act, 1882.

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Issues: Whether the properties settled under the trust deed and its subsequent amendments were includible in the deceased settlor's estate under section 12 read with section 27 of the Estate Duty Act, 1953.

Analysis: The trust deed and later deeds were construed together to ascertain whether the settlor had reserved an interest in the settled property or retained a power of revocation. The original settlement did not reserve a revocation power to the settlor; any power to execute rectification or supplementary deeds was conferred on the trustees for making the trust effective and workable. The subsequent deeds could not enlarge the settlor's authority beyond the limits of the original settlement. On the construction of the documents, the provisions for maintenance of family members and other payments charged on the trust property did not amount to a reservation of interest by the settlor for the purpose of section 12(1), and the trust was not revocable within the meaning of section 78 of the Indian Trusts Act, 1882.

Conclusion: The properties covered by the trust deed did not pass on the death of the deceased under section 12 of the Estate Duty Act, 1953, and were not liable to estate duty.

Final Conclusion: The reference was answered against the Revenue and in favour of the accountable person, holding that the settled properties were not assessable to estate duty.

Ratio Decidendi: For estate duty purposes, property settled by deed is not deemed to pass on the settlor's death unless the deed itself reserves an interest or an express power of revocation in the settlor; subsequent acts or deeds cannot supply such a reservation where the original instrument does not confer it.

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