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TMI Blog1962 (12) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment upon the income of the assessee. The Commissioner, in exercise of his suo motu powers of revision, revised the assessment, holding that the settlement fell within the mischief of section 9(1) of the Act. This revision was made after issuing a notice to the assessee and after hearing the assessee. The result was that the settlement was held to be a revocable settlement, falling within the proviso to section 9(1) of the Act, so that the assessee became liable to be assessed on the income of the properties covered by the settlement as well. On the application of the assessee under section 60(2) of the Act, the Commissioner has referred the following question for our decision: "Whether the settlement deed dated June 20, 1955, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om his property while continuing to be the owner of the property; and (2) he may make a revocable transfer of the property itself but continue to be in receipt of the income therefrom. In the first of these cases, despite the revocability or otherwise of the settlement, so long as the property from which the income is derived continues to be in the ownership of the settlor, the income arising therefrom is deemed to be the agricultural income of the settlor notwithstanding that such income has been settled on any other person. In the second case, the asset itself is transferred, but the transfer being revocable, the income arising from the property is deemed to be the income of the transferor. The proviso to the section sets out what shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was a major, the A Schedule properties were to be immediately taken possession of by him. The wife of the settlor was to take possession of the B and C Schedule properties on behalf of the two minor sons. The "Kumara Bhavan" property was to be in the possession and enjoyment of the settlor during his lifetime. The document also set out that it was agreed between the parties that each of the three sons should contribute towards the maintenance of their mother, the wife of the settlor, from out of the income derived from the properties settled on the sons. The following part of the document is important for the purposes of this case: "Whereas additional properties have been included in the Schedules A to C with a stipulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d been included in Schedules A to C. It specified that the document should be executed at an early date, but it did not indicate which properties were to be so gifted as stridhanam to the daughter, Ramalakshmi. It only stated that such of the properties of equal values which should be selected from each of the Schedules A to C. The last part of the extract above is of special importance. It clearly specifies that if the sons did not execute the document or caused obstruction or delay, then the settlor is given full right and authority to select the properties from out of the properties in Schedules A to C at his free will and to execute the stridhanam deed. Notwithstanding therefore that the properties had been allotted to the three sons an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, for, on the occurrence of the contingency, viz., the failure of the sons to execute the stridhanam deed, the settlor assumed the power to interfere with the settlement and to take away properties already allotted to the sons and to make a fresh allotment by way of stridhanam. Learned counsel for the assessee, however, refers to Commissioner of Income-tax v. S.M. Bose [1951] 21 I.T.R. 135. That was a case where it was held that the first proviso to section 16(1)(c) of the Income-tax Act could come into play only in cases where the settlor can lawfully reassume power over the income or the assets. If the document was such that the settlor retained no right whatsoever over the corpus or the income, he would have no right of revocation. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 9(1) of the Act takes a case out of the scope of section 9(1) if the settlement is not revocable for a period exceeding six years or during the lifetime of the settlor, and from which agricultural income the settlor derives no direct or indirect benefit. In order to invoke this third proviso both the above conditions should exist. It is true that the latter condition that the settlor derives no direct or indirect benefit from the agricultural income is satisfied. But the first condition that the settlement is not to be revocable for the period specified is not complied with. The third proviso has thus no application. We may also mention that in this decision there was some difference of opinion between the two learned judges, Kani ..... X X X X Extracts X X X X X X X X Extracts X X X X
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