TMI Blog1971 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... d by GROVERJ.-- This is an appeal by special leave from a judgment of the Calcutta High Court answering the following question of law referred to it against the assessee and in favour of the revenue: "Whether, on the facts and in the circumstances of the case, the entire or any part of the income from the house properties concerned could be included in the total income of the assessee by virtue of the provisions of section 16(1)(c) of the Income-tax Act, 1922, read with the first proviso thereto ?" The assessee was assessed in the status of an individual. He derived income from house properties and from the business of a registered partnership firm H. Ganguly Co. He had six houses one of which was 24, Mohanlal Street, Calcutta, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal, only the amount of Rs. 2,400 which had actually been received by the assessee under the terms of the trust deed could be included in his income. The view of the High Court was that, in order to be revocable under the first proviso to section 16(1)(c), it is sufficient if the settlement, disposition or transfer contains a provision for retransfer of a part of the income to the settlor, disponer or transferor. It is not necessary that there must be a provision for the retransfer of the entire income. The word " income " includes any part of the income unless there is anything repugnant in the context. The High Court considered that the third proviso to section 16(1)(c) did not explain the first proviso but was a kind of rider or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or arrangement and the expression 'settlor or disponer' in relation to a settlement or a disposition shall include any person by whom the settlement or disposition was made: Provided further that this clause shall not apply to any income arising to any person by virtue of a settlement or disposition which is not revocable for a period exceeding six years or during the lifetime of the person and from which income the settlor or disponer derives no direct or indirect benefit but that the settlor shall be liable to be assessed on the said income as and when the power to revoke arises to him." It is apparent that the above clause of section 16(1) with its provisos is unhappily worded. In Ramji Keishvji v. Commissioner of Income-tax the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered a separate judgment although he agreed with the answer given to the reference by Kania J. In his opinion the only way to reconcile the substantive provision of sub-clause (c), provisos (1) and (3), was to hold that proviso (3) contained a limitation which applied as much to the substantive provisions of sub-clause (c) as to proviso (1). The view expressed in the Ramji Keshavji's case was approved by this court in Commissioner of Income-tax v. Rani Bnuneswari Kuer. In that case the assessee, who owned an estate known as " Tekari Raj ", created a trust with a view to liquidate the debts of Tekari Raj. The beneficiaries under the deed were the settlor, her husband and her sons. It was declared that the settlement made was to be permane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be revocable was rejected by saying that the function of provisos (1) and (2) was plainly explanatory and it was impossible to hold that the third proviso did not operate in respect of settlements, dispositions or transfers which were by the first proviso revocable for the purposes of that clause. We have referred to the above case in extenso because in our opinion it fully covers the point which has arisen in the present case. In the light of the above principles it would not be wrong to say that the effect of the third proviso is that a settlement or disposition containing a provision for retransfer of a part of the income to the settlor would not render the whole income of the settlement chargeable in his hands provided the other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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