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1965 (4) TMI 17 - SC - Income TaxWhether the dividend income of 300 shares of the Simbhaoli Sugar Mills Private Ltd. transferred by the assessee to S. Raghbir Singh Trust was the income of the assessee liable to tax ? Whether the assessee was entitled to claim deduction of ₹ 19,856 paid as interest to R. B. Seth Jessa Ram Fatch Chand against the dividend income of the aforesaid 300 shares ? Held that:- Unable to accept the argument of counsel for the revenue that by the use of the expression " indirectly " in the first proviso the legislature sought to bring within the purview of clause (c) cases where the settlor was under the guise of a trust seeking to discharge his own liability. The proviso contemplates cases in which there is a provision for retransfer of the income or assets and such provision is for retransfer directly or indirectly. It also contemplates cases where there is a provision which confers a right upon the settlor to reassume power over the income or assets directly or indirectly. It is the provision for retransfer directly or indirectly of income or assets or for reassumption of power directly or indirectly over income or assets which brings the case within the first proviso. Cases in which there is a settlement, but there is no provision in the settlement for retransfer or right to reassume power do not fall within the proviso, even if as a result of the settlement, the settlor obtains a benefit. Appeal dismissed.
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