TMI Blog1976 (8) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks carried his capital account. He had earmarked the amount in his capital account to his grandsons by a will made out by him on 21st Sept., 1970. The original will is in Tamil. That part of the will dealing with the credit balance in the firm's account stated that he had, at the time of writing of the will, certain credit balances in Colombo Stores (the assessee firm) standing in his name. These amounts have to be taken by his son Kalidasan as trustee and he has to take charge of it and improve it and hold it on behalf of his sons who were living or who may be born hereinafter. The trustee has to divide the amounts among his sons after the last boy attained the age of 18. 3. Accordingly, after the death of Seeniappa Nadar, the amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her hand, submitted that the beneficiary itself is not clear. Children yet to be born have also an interest and so it is not possible to predicate that only the two minor sons who are partners are entitled to the corpus of the funds. He further submitted that Shri Kalidasa Nadar is in the position of an executor to the will of the trust of the late Seeniappa Nadar and till the estate administration is complete the interest would be received only by the estate. He further submitted that in any case there is no payment to the minor partners and they have no right to receive this amount during the accounting year. 6. We have considered the position. We have first to decide as to the capacity of Kalidasa Nadar in receiving the interest credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of persons who could be termed as his grandsons i.e. sons of his son Kalidasa Nadar. There is no provision in the will express or implied indicating the period of distribution later than the death of the testator. There is also no deferring of possession beyond the death. Under these circumstances, the date of ascertainment in view of s. 111 of the Indian Succession Act was the date of death. Under these circumstances, the property will go to the grandsons who were alive and existing at the time of the death of the testator. Future grandsons born after the date of death will have no right therein. This proposition is settled by the decision of the Madras High Court in the case of A. Narayanan Anr. vs. CIT 47 ITR 740 (Mad). There also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference. The interest would be the income of the two grandsons only. 8. The next point to be seen is whether there is any payment made by the firm. Now, here we should rule in favour of the Department. There is payment as far as the firm is concerned. At this point we should remind ourselves that the question before us is whether the amount could be allowed as a deductible expenditure in the hands of the firm. By normal standards it would be allowed as a deductible expenditure. The only snag is the provision of s. 40(b). But for that section it is clearly an allowable expenditure. As far as the firm is concerned, money has been credited to the account and it is open for the trustee to draw the money out and deposit it somewhere else. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and it was provided that the interest on that amount should be accumulated and added to the corpus and a minor daughter of the assessee was to receive the income from the corpus increased by the additional interest when she attained the age of 18. The Department added this amount under s. 16(3)(b) of the 1922 Act corresponding to s. 64. The Supreme Court held that such addition was not correct. They pointed out at page 880 as under :— "It is clear from these clauses that during the minority of Chandrika, the income from the trust funds was to be accumulated and added to the trust funds and after she attained majority on 1st Feb., 1959, she was to get only the income from the enlarged trust funds. Now in the relevant year of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
