Trust transfers for minor children not made for adequate consideration; trust assets included in net wealth under wealth-tax law.

A transfer of property to trusts created for a settlor's minor daughters was held not to be for adequate consideration under section 4(1)(a)(iii) of the Wealth-tax Act, 1957. The trustees' undertaking to administer the trust was not consideration in law, because it was not a return given for the transfer. The settlor's duty to maintain and provide for his minor daughters, including marriage expenses, remained a personal obligation and was not discharged by a unilateral trust settlement; the minors could not supply consideration by any act or waiver, and the statutory reduction in maintenance under section 23(2)(d) of the Hindu Adoptions and Maintenance Act, 1956, was also not treated as consideration. The trust property was therefore included in the assessee's net wealth.

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Issues: Whether the value of assets transferred under trusts created for the settlor's minor daughters was includible in the settlor's net wealth under section 4(1)(a)(iii) of the Wealth-tax Act, 1957, or whether the transfers were made for adequate consideration.

Analysis: The statutory test required a transfer otherwise than for adequate consideration for the benefit of the individual's spouse or minor child. The Court held that the trustees' undertaking to carry out the trust was not consideration in law, because a trust once constituted does not depend upon such an undertaking as a return for the transfer. The Court further held that the settlor's legal obligation to maintain and provide for his minor daughters, including marriage expenses, was a personal obligation that could not be extinguished by a unilateral trust settlement, and the minors could not by any act or supposed relinquishment supply consideration. The reduction in maintenance arising by operation of law under section 23(2)(d) of the Hindu Adoptions and Maintenance Act, 1956, was also not treated as consideration moving from the minors.

Conclusion: The trusts were not transfers for adequate consideration, and the value of the trust properties was rightly included in the assessee's net wealth.

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