TMI Blog1967 (3) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... swered the second question set out herein below in the negative, and declined to answer the first question : " 1. Whether, on the facts of the case, the provisions of section 16(3)(a)(iv) are applicable to the two trusts created by Keshavji Morarji and Jaysinh Keshavji both on February 22, 1954 ? 2. Whether, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Appellate Tribunal confirmed the order of the Appellate Assistant Commissioner. The High Court held that the circumstance that the two deeds of settlement were executed on the same day did not justify an inference that Keshavji and Jaysinh made indirect transfers of assets in favour of their respective children " 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are incorporated in the statement of case and the record. To mention only a few : the two settlors were related as father and son ; that the father had made a settlement in favour of his grand-children simultaneously with the execution of a deed of settlement by the son in favour of his sisters one of whom was a 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 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fall within the section. In C. M. Kothari's case the court was interpreting section 16(3)(a)(iii), but the same considerations are relevant in the application of section 16(3)(a)(iv). The Tribunal merely observed that the two transactions were " mutually prompted " and each of the gifts provided for the consideration of the 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 appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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