Private Client Quarterly Milestones (January-March 2026)

The Delhi High Court in Padmaja Kumari Parmar v Lakshyaraj Singh Mewar & Ors.,⁴ examined competing petitions concerning the estate of the late Arvind Singh Mewar, a member of the royal family of Mewar, Rajasthan. The deceased’s daughter filed a petition for Letters of Administration⁵ (LoA) on the premise of intestacy (i.e., where the deceased individual had not executed a valid Will), acknowledging the existence of an alleged Will but disputing its validity due to the testator’s alleged mental incapacity. Concurrently, the deceased’s son filed a petition for LoA annexing the disputed Will, claiming exclusive rights to the entire estate as the sole legatee.

The core issue before the Court was whether a petition for LoA on the ground of intestacy is maintainable when a parallel proceeding alleging the existence of a valid Will is already pending. The Court dismissed the intestacy petition, ruling that the validity, due execution, and genuineness of a Will must be exclusively adjudicated in proceedings where the Will is alleged. If a Will is alleged to exist, its validity cannot be proved or disproved in parallel proceedings for intestate succession.

This case highlights the high potential for aggrieved relatives to disrupt intestacy proceedings by producing a Will, whether real or fabricated. Similarly, probate or LoA proceedings in respect of genuine Wills may also be disrupted by the production of fabricated Wills. To ensure evidentiary propriety and mitigate such risks, testators should obtain appropriate medical certificates attesting to their mental competency at the time of execution and have the execution of the Will photographed or video-graphed.

In VS Trust v Income-tax Officer,⁶ the Chennai Bench of the Income Tax Appellate Tribunal (ITAT) examined the applicability of deemed gift tax provisions under the erstwhile Section 56(2)(x) of the Income-tax Act, 1961 (Old IT Act), now replaced by Section 92(2)(m) of the Income-tax Act, 2025.

The assessee, a private discretionary trust settled to benefit the settlor’s family, received shares worth approximately INR 15.78 crore during Assessment Year (AY) 2022–23 and claimed the exemption from deemed gift tax provisions available to trusts established solely for the benefit of the settlor’s specified relatives.

The Assessing Officer and Commissioner (Appeals) denied the exemption on two grounds. First, the original trust deed allowed trustees to add “entities” controlled by the settlor’s relatives as beneficiaries, creating the possibility of indirect benefit to non-relatives (such as minority shareholders of such entities). Second, that a supplemental deed, executed a year later to amend this clause, was invalid, as the amendment clause in the original deed prohibited altering the primary objects of the trust.

The assessee submitted that the tax authorities erroneously relied on a deleted clause. The supplemental deed, made retrospectively effective from the trust’s inception, replaced the original clause and restricted the trustees’ powers to reclassify or remove beneficiaries. The assessee further contended that the amendment was valid as it did not alter fundamental objects of the trust but reinforced its intent to benefit only specified relatives.

The ITAT ruled in favour of the assessee, upholding the validity of the amendment, noting the operative deed eliminated any possibility of non-relatives benefiting. Accordingly, the trust qualified for exemption under Section 56(2)(x) of the Old IT Act, and the addition of INR 15.78 crore was deleted.

The outcome in this case turned on the timing and validity of the amendment. In contrast, in Buckeye Trust,⁷ a similar amendment was rejected by the Bengaluru Bench of ITAT, as it was introduced only after the defect had been identified during tax proceedings. In VS Trust, however, the amendment was treated as integral to the trust framework from inception.

These rulings reflect an increasingly stringent approach by tax authorities, focusing not only on the actual class of beneficiaries in a given year but also on the potential scope of trustee powers under the trust deed. The mere presence of a power to introduce non-relatives, whether directly or indirectly, may be sufficient to deny a tax exemption. In this context, settlors and advisors must ensure beneficiary definitions and trustee powers are tightly drafted at the outset, with no residual flexibility that could be construed as potentially permitting benefit to non-relatives. Existing trust structures may also warrant review to assess and mitigate any such exposure.