TMI Blog2010 (9) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... er was not made directly or indirectly to the daughter in law or her grandchildren but to an association of person for the benefit of his daughter in law or her grandchildren. Held that - Tribunal is right. Answer the questions in favour of the assessee and against the Revenue. - 72, 73 and 74 of 1990 - - - Dated:- 1-9-2010 - A. K. SIKRI and MS. REVA KHETRAPAL, JJ. Ms. Prem Lata Bansal, Advocate Mr. C.S. Aggarwal, Sr. Advocate with Mr. Prakash Kumar, Advocate JUDGMENT A. K. Sikri J .-In these three references, we are concerned with identical questions which arise in respect of three assessment years of the same respondent-assessee; assessment years being 1979-80, 1982-83 and 1983-84. 2. These questions are referred b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view taken by the Appellate Assistant Commissioner. 6. For the assessment years 1982-83 and 1983-84, the assessee did not include in her return the aforesaid 50 per cent. share of the income of the trust. The Income-tax Officer completed the assessments under section 143(1). The Commissioner of Income-tax thereafter invoked his jurisdiction under section 263 and, vide order dated November 19, 1985, setting aside the assessments, he directed the Income-tax Officer to include the said share in the income of the assessee. The assessee then preferred I. T. A. Nos. 6662 and 6663/Del./1985 against the orders of the Commissioner and the Tribunal, vide consolidated order dated May 12, 1986, cancelled the order passed by the Commissioner under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese clauses reads as under : "64. Income of individual to include income of spouse, minor, child, etc.-(1) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly . . . (vi) to the son's wife, or son's minor child, of such individual, from assets transferred directly or indirectly on or after the 1st day of June, 1973, to the son's wife or son's minor child by such individual otherwise than for adequate consideration ; (vii) to any person or association of persons from assets transferred directly or indirectly otherwise than for adequate consideration to the person or association of persons by such individual, to the extent to which the income from such assets is for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion, therefore, is as to whether creation of trust and transfer of assets by the assessee to the trust would amount to the indirect transfer? 10. We are of the opinion that the Tribunal was right in its conclusion that transfer of asset to the trust was not even an indirect transfer. It was because of the reason that the trust is an independent legal entity and it is the trustee who is the legal owner of the trust property. The persons named therein may be the beneficiaries, but they have right only against the trustee who is the owner of the trust property. This is so held by the Supreme Court in W. O. Holdsworth v. State of Uttar Pradesh [1958] 33 ITR 472. 11. This legal position becomes clear when we read the provisions of clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are cited on which reference may be made have been discussed by the Tribunal also at length and since we are agreeing with the reasons given by the Tribunal, we reproduce the discussion contained therein : "The other decision of the hon'ble Supreme Court of India reported in CIT v. C. M. Kothari [1963] 49 ITR (SC) 107 also does not help the case canvassed by the Departmental representative. That was a case of cross-gifts/transfers from father to daughter-in-law and son to mother of equal amounts and it was held by their Lordships that the income derived from property thus transferred was includible in the hands of the two transferors. In the present case, the facts are entirely different. As has been repeatedly said earlier it is a case w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a case of indirect transfer. In the present case, the transfer had been made to a legal entity and since it had not been made directly or indirectly to the class of persons mentioned in section 64(1)(vi), the decision reported in R. Venkatachala Thevar v. State of Madras [1972] 86 ITR 701 (Mad) would not apply. Even though we bow to the law laid down by the hon'ble Supreme Court of India in McDowell and Co. Ltd. v. CTO [1985] 154 ITR 148 (SC) and Work-men v. Associated Rubber Industry Ltd. [1986] 157 ITR 77 (SC), we find that the present case does not fall within any colourable device or a subterfuge. The provisions of a taxation law have to be interpreted in a manner so that they counteract evasion but in the present case where the affa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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