TMI Blog2015 (11) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... reason that the income that had been earned by the trustees was not available to the two minor children till attaining the age of majority. As pointed out above, this was one of the conditions contained in the trust deeds that the income so generated by the trust, shall not be given to or spent for the benefit of the minor children till they attain majority and the money was to be handed over to them only on attaining the majority which would mean that the income was available to these persons when they cease to be the minors. This very question came up before this court in almost identical circumstances in the case of CIT v. M. R. Doshi [1994 (9) TMI 3 - SUPREME Court] wherein held as in this case the deferment of the benefit is beyond th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trust was for the benefit of Km. Priti who was aged about 7 years and the other trust was created in the name of Anuj Family Trust for the benefit of master Anuj, minor son of the appellant, Kapoor Chand. Both these trustees became partners in the partnership firm. The said partnership firm earned profits in the year 1980- 81 with which we are concerned in the present appeal and share of the two trusts was given to them. 3. Since these trusts were for the benefit of two minor children of the appellant, invoking the provisions of section 64(1)(iii) of the Income-tax Act, 1961 (for short the Act), the Assessing Officer included the said income in the income of the assessee and taxed as such. 4. The appellant contested the assessment b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l has come up for final hearing. 6. Before we take note of the contention advanced by the learned counsel for the appellant challenging the correctness of the impugned judgment, it would be apposite to reproduce the relevant provisions of the Act. Section 64(1)(iii) as well as Explanation 2A thereof read as under : 64. (1) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly- . . . (iii) to a minor child of such individual from the admission of the minor to the benefits of partnership in a firm : Explanation 2A.-For the purposes of clause (iii), where the minor child of an individual is a beneficiary under a trust, the income arising to the trustee from the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions contained in the trust deeds that the income so generated by the trust, shall not be given to or spent for the benefit of the minor children till they attain majority and the money was to be handed over to them only on attaining the majority which would mean that the income was available to these persons when they cease to be the minors. This very question came up before this court in almost identical circumstances in the case of CIT v. M. R. Doshi [1995] 211 ITR 1 (SC). The court, after taking note of some judgments of High Courts including the judgment of the High Court of Bombay in Yogindraprasad N. Mafatlal v. CIT [1977] 109 ITR 602 (Bom) interpreted the provisions of section 64(1)(v) of the Act in the following manner (page 4 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mediate or deferred must still be a benefit of the minor child. In view of the fact that the said expression is still retained in the relevant provisions it is not possible to accept the argument that the 'deferment' can be beyond the minority of the child. If the enjoyment of the benefit is postponed beyond the mino rity of the child it cannot be fairly regarded and accepted as a benefit even deferred for the minor child. (ii) In order to attract the provision, the minor child must have a direct benefit of the interest in the income and the assets transferred to the trustees. Where the trust contains a stipulation that the income is to be accumulated and added to the corpus it cannot be held that the child has any direct benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed to provide that where a minor child of an individual is a beneficiary under a trust and the trustee joins in any partnership business with any person, the income arising to the trust, to the extent it is for the benefit of the minor child, will be included in the total income of that parent who has the higher income. 12. We are afraid the aforesaid explanation does not help the Department. The provision that is contained in Explanation 2A is only to take care of the income even when a trust is created. It does not go further and make any provision to the effect that even when the income earned by the trust cannot be utilised for the benefit of the minor during his minority the Explanation 2A shall be attracted. We do not find any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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