Vested interest in trust corpus treated as property capable of valuation despite postponed enjoyment and survival contingency

The trust deed was construed as creating a vested interest in the corpus, because an interest is treated as vested unless a condition precedent is expressed with reasonable clarity. A mere postponement of enjoyment, or dependence on survival, did not reduce the assessee's right to a spes successionis; a contingent interest remained recognised property capable of transfer. The Court also relied on the intermediate income being applied for the benefit of the assessee and his wife, the general power of appointment, the gift-over provisions, and the absence of any disposition of accumulated income if the assessee died before the appointed date. The assessee's interest was therefore held to be vested and capable of valuation.

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Issues: Whether the assessee's interest in the corpus of the trust was a mere spes successionis or a contingent interest, or whether it was a vested interest capable of valuation for wealth-tax purposes.

Analysis: The trust deed postponed enjoyment of the corpus till a future date, but the Court read the instrument as a whole and applied the settled rule that an interest is to be treated as vested unless a condition precedent is expressed with reasonable clearness. A mere contingency on survival did not make the interest a spes successionis, because a contingent interest in property is a recognised and transferable form of property. The Court further held that the exception to section 21 of the Transfer of Property Act was attracted because the intermediate income was directed to be applied for the benefit of the assessee and his wife, the arrangement showed an intention to benefit the assessee during the interim period, and the general power of appointment and gift-over provisions also supported vesting. The absence of any disposition of accumulated income if the assessee died before the appointed date was treated as an additional indicator that the corpus was intended to vest in the assessee immediately, subject to divestment on the happening of specified events.

Conclusion: The assessee's interest in the corpus was held to be a vested interest and not a spes successionis or a merely contingent interest; it was therefore capable of valuation.

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