TMI Blog1970 (3) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... One Rustom D. N. Wadia created a settlement by his will read with one of his three codicils to the will. The material clauses are in the third codicil dated 28th December, 1937. Clauses 2(d) and 2(e) of that codicil are the only relevant clauses and they read as under : " 2. The executors and trustees appointed by my said will and hereinafter referred to as my trustees shall divide all the rest and residue of my estate wheresoever situate or treat the same as divided into two equal moieties and shall hold the said moieties upon the respective trusts hereinafter declared with regard to them respectively : .... (d) My trustees shall pay the net income of the other of the said moieties to my son, Dady, until his death or until he shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) natural love and affection for his children, the releases, the releasor doth hereby release unto the releases all that his right to receive the net income of the said moiety which moiety now consists of the shares .... to have and to hold the releasor's right hereby released unto the releases and their respective heirs, executors, administrators and assigns in equal shares. " At the date of this release the assessee had three children, but only one of them, a son named Sheryar, was a minor. The revenue sought to include the income from the trust coming to the share of Sheryar after the deed of release in the assessable income of the assessee on the basis of the provisions contained in section 16(3)(a)(iv) contending that the deed of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and interest which the transferor has is transferred by him to the transferee. It is the cessation of the right in the transferor coupled with the creation of a corresponding right in the transferee. In the case of a release, however, the creation of a right in another person may follow as a matter of law, but not by reason of the release effected by the releasor. In a transfer, however, the transfer from the transferor to the transferee takes place by reason of the transfer. The distinction is too clear and has been established for a very long time to need any further elaboration. Mr. R. J. Joshi, the learned counsel for the revenue, however, drew our attention to a decision of this High Court in Commissioner of Income-tax v. Dadabhoy G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... death or until he did any act the effect of which would be to vest his right to the said income in any other person or persons. Under the provisions of sub-clause (c) of clause 2, the children of the assessee would become entitled to that income on the happening of any of the events terminating the assessee's right to the income. If the release were to be treated as a transfer, the effect would be that the moment the assessee executed the deed of release, his interest under the trust would immediately cease under the provisions of sub-clause (d) of clause 2 and his children's right under sub-clause (e) would immediately get accelerated which right the children would have otherwise acquired only upon the death of the assessee. So, even if t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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