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TMI Blog1967 (3) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... er, on the facts and in the circumstances of the case, the creation of a trust by Keshavji in favour of his minor grand-children concurrently with the creation of a trust by Jaysinh in favour of Keshavji's daughters constitute indirect transfers of assets by Keshavji and Jaysinh to their respective children for the purpose of section 16(3)(a)(iv) of the Act ? " With special leave, the Commissioner of Income-tax has appealed to this court. Keshavji, a resident of Bombay, has a son, Jaysinh, and three daughters Indumati, Kusum and Dipika, of whom, in the relevant years of assessment, Dipika was a minor. Jaysinh has two infant children, Bipin and Kamla. On June 14, 1952, Keshavji transferred a sum of Rs. 5 lakhs to his son, Jaysinh. On Feb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ldren " for the purposes of section 16(3)(a)(iv) of the Act. Citing with apparent approval the decision of the Madras High Court in C. M. Kothari v. Commissioner of Income-tax, the High Court held that the fact that there were cross-gifts either by itself or taken with the fact that the gifts were simultaneous in point of time did not establish that each transfer formed consideration for the other or that the transfers were mutual. In this appeal, counsel for the Commissioner submitted that the learned judges of the High Court in exercising their advisory jurisdiction upset findings of fact recorded by the Tribunal and persuaded themselves to record an answer in the negative on the second question relying mainly on the decision of the Mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minor ; that from the description given in the two deeds of settlement both the settlors were residing in the same house ; that no explanation was given why Keshavji and his son, Jaysinh, executed the two deeds of settlement simultaneously. In a recent judgment of this court, in Commissioner of Income-tax v. C. M. Kothari this court, in dealing with a case under section 16(3)(a)(iii) of the Income-tax Act, observed at page 110 : " It is true that the section says that the assets must be those of the husband, but it does not mean that the same assets should reach the wife. It may be that the assets, in the course of being transferred, may be changed deliberately into assets of a like value of another person... A chain of transfers, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other and did not attempt an examination of the evidence in the light of the true test. The High Court, in disagreeing with the Tribunal, also did not consider all the material evidence in the light of the test suggested by this court. We are, in the circumstances, unable to sustain the answer recorded by the High Court on the second question. We may observe, lest there should be misconception as to the true rule applicable, that the observations made by the Madras High Court in L. G. Balakrishnan v. Commissioner of Income-tax on which reliance was placed at the Bar that if " cross-transactions are independent of each other the section cannot have any application. Even if they are parts of the same transaction they would fall outside t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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