1. The Income-tax Appellate Tribunal has referred the;following question of law under section 64(1) of the Estate Duty Act' forthe opinion of this court:
'Whether, on the facts and in the circumstances of the case, such interest as Mrs. K. A. Oakshott had in the estate of her late husband was an asset located in the taxable territory so as to attract estate duty ?'
2. One Mr. O. T. Oakshott died in England on 22nd October, 1951, Onhis death, estate duty was levied in U. K. on his entire estate whichincluded 1,167 ordinary shares of Spencer and Co. Ltd., as on its Madrasregister and 71,340 ordinary shares of that company on its London registerand 2,780 'A' preference shares and 5,855 'B' perference shares on thecompany's London register. Mr. Oakshott has left behind him a will datedApril 22, 1952. Executors have been appointed under the will. Soonafter his death, the executors took into custody all the assets belonging to thedeceased. In 1956 itself the executors got the shares in the Spencer andCompany Ltd. transferred in their names. Mrs. Oakshott, the wife of thedeceased, was one of the legatees under the will of her husband. She herselfwas domiciled in England. She died on the 6th October, 1960. The relevantprovisions in the will which are material for the purpose of considering thequestion referred to this court are as follows:
'5. I devise bequeath and appoint all my real and personal property whatsoever and wheresoever situate not otherwise disposed of by this my will or say codicil hereto unto my trustees UPON TRUST that my trustees shall sell, call in and convert into money the said real and personal property at such time or times and in such manner as they shall think fit and so that they shall have the fullest powers and discretion to postpone the sale calling in and conversion of the whole or any part or parts thereof including leasehold or other properties of a determinable or wasting nature, hazardous investments and unsecured debts during such period as they shall think fit or proper and to retain the same or any part thereof then present form of investment and in particular to retain the shares of Spencer and Company Limited belonging to me at my death without being responsible for loss and also to permit my said wife to reside rent-free so long as she may desire so to do in any dwelling house belonging to me at my death she paying all rates taxes insurance and reasonable repairs payable in respect thereof and (if of leasehold tenure) any ground rent payable therefor and I declare that the income of such part of my estate as shall for the time being remain unsold shall as will during the first year after my death as afterwards be applied as if the same were income arising from investments hereinafter directed to be made of the proceeds of the sale thereof and I express the wish but without the intent to create any legal obligation that my trustees so long as my holding of shares in Spencer and Company Ltd., forms part of my estate and on the sale of the whole or greater part thereof will take such steps as may lie within the powers of my trustees and necessary to be taken in order to afford adequate protection to the interests as employees of the many loyal employees of Spencer and Company Limited.
6. My Trustees shall out of the moneys to arise from the sale calling in and conversion of or forming part of my real and personal property paymy funeral and testamentary expenses and my debts and legacies bequeathed by this my will or any codicial hereto and the duties (if any) on legacies given free of duty.
7. My trustees shall invest the residue of the said moneys in their names in or upon any investments for the time being authorised by law for the investment of trust funds or in or upon the debentures (debenture) stock or rent charge guaranteed or preference shares of any company incorporated by Special Act or Acts of the Imperial Parliament or the Legislature of any colony or Royal Charter or in the purchase of and the cost of any improvements to landed property in England or Wales but not in Ireland of any tenure including leasehold of which not less than sixty years shall be unexpired and whether subject or not to leases easements or restrictive covenants with power to vary or transpose such investments for or into others of a nature hereby authorised.
8. My trustees shall pay the income of the residue of the said moneys (which moneys and the property for the time being representing my residuary estate are hereinafter called 'the trust fund') to my said wife during her life. In making this provision I am confident that my wife will should occasion arise help to provide for our children during her life.
9. After the death of my said wife my trustees shall stand possessed of the trust fund in trust to pay thereout the following annuities free of all death duties, namely:
(a) to my sister-in-law the said Louise Fleming an annuity of one hundred and fifty pounds during her life ;
(b) to the said Mary Jones an annuity of two hundred pounds during her life;
(c) to the said Amy Langdon an annuity of two hundred pounds during her life.
And I declare that such respective annuities shall begin from the death of my said wife and shall be payable by equal quarterly payments the first to be made at the expiration of three calendar months from the death of my said wife.
And I also declare that no annuitant shall be entitled to receive the capital value of her annuity in lieu thereof.
My trustees shall also pay out of the trust fund to the said Albert Price if in my employ or the employ of my said wife and not then under notice to leave given or received the sum of five hundred pounds in addition to the legacy of one hundred pounds hereinbefore given to him.
Subject thereto my trustees shall stand possessed of the residue of the trust fund in trust as to one equal moiety thereof for my said son Gordon Tennet Oakshott and as to the remaining equal moiety thereof for mydaughter Kathleen Beryl Anwyl Davies Provided always that the share of the trust fund hereinbefore given to each child of mine shall not vest absolutely in such child but shall be retained by my trustees and held by them upon the trusts hereinafter declared concerning the same respectively that is to say :
(i) During the life of my said son my trustees shall pay the income of one equal moiety of the trust fund to him and after his death my trustees subject to any appointment under the power hereinafter contained in favour of any surviving wife of my said son shall stand possessed of the capital and income of such one equal moiety of the trust fund in trust for all or any children or child of my said son who shall attain the age of twenty-one years or being female shall attain that age or marry and if more than one in equal shares as tenants-in-common.
(ii) During the life of my said daughter my trustees shall pay the income of the remaining one equal moiety of the trust fund to her and after her death subject to any appointment under the power hereinafter contained in favour of any surviving husband of my said daughter other than her former husband Thomas Anwyl Davies shall stand possessed of the capital and income of the such one equal moiety of the trust fund in trust for and if more than one equally between such of them my said son (if living at the death of the said daughter) and each of the children of my said son and of my said daughter who shall be living at the death of my said daughter and who being male shall attain the age of twenty-one years or being female shall attain that age or marry under that age ;
(iii) If the trustees hereinbefore declared concerning the share of either child of mine in the trust fund shall fail or determine then subject to the trusts power and provisions herein declared and contained and to the powers by law vested in my trustees concerning the same to every or any exercise of such respective powers my trustees shall hold such share and the income thereof upon trust for the other child of mine and subject to the trusts powers and provisions herein declared and contained concerning his or her original share or as near thereto as circumstances will admit.'
3. The Assistant Controller of Estate Duty took the view that with reference to the shares in Spencer & Co. Ltd. on the Madras register the accountable person was liable to pay estate duty because Mrs. Oakshott had only a life estate in the said shares and that, on her death, it passed on to the persons enumerated in Clause 9 of the will. The executors objected to the levy of estate duty and the Assistant Controller overruled the objections and levied the duty. The executors preferred an appeal to the Appellate Controller but the appeal proved unsuccessful. Thereafter, they preferred an appeal to the Income-tax Appellate Tribunal and the Income-tax Appellate Tribunal took the view that what Mrs. Oakshott had was equitablechose-in-action in England and did not have any specific interest in the shares on the Madras register of Spencer & Co. Ltd. and that, therefore, there was no asset located in the taxable territory so as to justify a levy under the Estate Duty Act, 1953. It is on this finding of the Appellate Tribunal the department asked for the reference of the above question to this court and the Tribunal having referred this question, the matter has come before us.
4. The above clauses extracted from the will of Mr. Oakshott clearly show that Mrs. Oakshott did not have any interest in the shares of Spencer & Co. Ltd. specifically. In paragraph 10 of the order of the Appellate Tribunal, it is stated :
'It is an admitted fact that Mrs. Oakshott was not given specifically the shares in Spencer & Co. Ltd.'
5. Clause 5 enabled the Trustees to apply the income from the assets of Mr. Oakshott and also any income arising from the investments made out of the sale proceeds of such assets for paying the legatees as provided for under the terms of the will. Clause 8 which alone deals with the payment of the amount to Mrs. Oakshott during her lifetime clearly states :
'the income of the residues of the said moneys (which moneys and the property for the time being representing my residuary estate are hereinafter called 'the trust fund') to my said wife during her life.'
6. Consequently, the reference to 'the said moneys' has to be construed in the context of the reference to 'the said moneys' occurring in Clause 7 and also 'the moneys' referred to in Clause 6. The trust fund mentioned in Clause 8 of the will will consist of dividend from the shares as well as the income from the assets left behind by Mrs. Oakshott undisposed of by the executors and also the income from converted assets of Mr. Oakshott--in other words, the assets brought into existence by purchase out of sale proceeds of the assets left behind by Mr. Oakshott--and, consequently, the trust fund is a composite fund pooled out of the income arising from the various sources referred to above. The dividend from the shares in Spencer & Co. Ltd. had not been earmarked or set apart for any specific purpose in any part of the will. As we pointed out already, Clause 8 refers to a 'trust fund' and that trust fund to be formed out of the residue of the 'said moneys', the expression 'said moneys' including not merely the dividend from the shares of Spencer & Co. Ltd. but all other income resulting from the estate of the late Mr. Oakshott. Under those circumstances, we are clearly of the opinion that Mrs, Oakshott was not entitled to any particular assets out of the estate of Mr. Oakshott, especially the shares of Spencer & Co. Ltd. As a matter of fact, it is admitted that having regard to the terms of the will, Mrs. Oakshott herself could not have taken any action against Spencer & Co. Ltd. for recovery of the dividend due and payable on the shares in question and her only remedy was against the executors of the will for payment to her out of the trust fund mentioned in Clause 8 of the will. Under these circumstances, the Tribunal was right in stating that all that she was entitled to was to get the income from the moneys invested or the properties left after the payment to the specific legatees and after making provision for creating a fund for payment of annuities, the payment of debts and all the property charges and expenses incurred in the administration of the estate and that right, as she was domiciled in England and as the executors were also in England, can be enforced only in England and that, therefore, there was no property which can be said to pass in India so as to attract Section 7 of the Estate Duty Act as contended by the department. From a reading of the various provisions contained in the will, it is clear that Mrs. Oakshott was not specifically entitled to or did not have any interest in the shares in Spencer & Co. Ltd. and consequently Section 7 of the Estate Duty Act cannot be invoked and the only right she had was to receive from the executors, out of the trust fund, which itself was constituted out of the moneys from the residuary estate of Mr. Oakshott, for her life and that cannot certainly be stated to be an asset located in India. For these reasons we agree with the conclusion of the Tribunal and answer the question referred to us in the negative and in favour of the assessee. We may also mention that in view of the position being very clear from the terms of the will itself, we have not found it necessary to refer to the various decisions relied on by the Tribunal in support of its conclusion. The respondent will be entitled to its costs. Counsel's fee is fixed at Rs. 250.