Judgment

HEGDE, J.: - These appeals by certificate under section 29 of the Wealth Tax Act, 1957 (to be hereinafter referred to as the Act) arise from a reference under section 27 (1) of the Act to the High Court of Gujarat. Therein four questions were referred to the High Court for its opinion. These four questions really gave rise to two questions of law viz (1) whether under the three trust deeds referred to therein the assessee got annuities falling within the scope of section 2 (e) (iv) ? and (2) whether the value of the jewels owned by the assessee was exempt under section 5 (1) (viii) in computing the net wealth of the assessee?

2. The assessee is an individual and the assessment years with which we are concerned in these appeals are 1957-58 and 1958-59, the corresponding valuation dates being December 31, 1956 and December 31, 1957.

3. By a deed of settlement dated September 7, 1945 the father of the assessee settled certain shares of the Indian Companies of the estimated value of Rs. 5,50,325 upon trust for the benefit of his two sons and his daughter, the assesse. By another deed of settlement dated October 12, 1945 he settled certain other shares upon trust for the benefit of the assessee and her two brothers. All the terms of the two trust deeds relevant for our present purpose are identical. By a deed of settlement dated September 30, 1945, the mother-in-law of the assessee settled upon trust a sum of Rupees 3,88,931 and shares of some Indian Companies of the aggregate market value of Rs. 11,81,670. The assessee is one of the beneficiaries named in that deed. The assessee also possessed jewellery of the value of Rs. 80,000.

4. As regards the payments to be made to the assessee under the aforementioned three trust deeds, the contention of the assessee is that under each of those deeds, she has only a right to an annuity and the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant and hence in view of Section 2 (e) (iv), the value of those annuities cannot be included in the computation of her net wealth. As regards the jewellery her case is that they are articles of her personal use and therefore their value cannot be taken into consideration in ascertaining her net wealth. She contends that the value of those jewellery is exempt under section 5 (1) (viii). The Wealth Tax Officer rejected both those contentions and assessed her after including in her net wealth the value of the benefits receivable by her under the trust deeds in question as well as the value of the jewellery minus Rs. 25,000 deduction given under S. 5 (1) (xv) as it stood at the relevant time.

5. Against that order the assessee went up in appeal to the Assistant Appellate Commissioner. That officer agreed with the conclusions reached by the Wealth Tax Officer and he accordingly dismissed the appeal of the assessee. Thereafter the assessee appealed to the Tribunal. The Tribunal held that the payments to be made to the assessee under the trust deed executed by her mother-in-law is an annuity entitled to exemption under section 2 (e) (iv). As regards the payments to be made to the assessee under her father s settlement deeds it opined that as the assessee was entitled to withdraw from the trust fund at her own discretion after she attained majority and after she gave birth to one child, one half of the corpus, to that extent commutation was possible. Therefore to the extent of one half of the value of the annual payments to be made to her under those deeds, the assessee was not entitled to exemption under section 2 (e)(iv) but she was entitled to exemption as regards the other half. The Tribunal rejected the assessee s claim for exemption under S. 5 (1) (viii) i.e. in respect of the value of the jewellery.

6. On a reference under S. 27 (1), the High Court of Gujarat held that the payments to be made to the assessee under the three settlement deeds do not come within section 2 (e) (iv) but the value of