TMI Blog1948 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... de provisions with regard to the death of any of the three beneficiaries before the death of the survivor of the settlors, and clause 4 deals with Phiroz predeceasing the survivor of the settlors. That clause considers various contingencies, whether Phiroz died leaving a widow surviving and any issue, or a widow surviving and no issue, or no widow surviving but leaving issue, and also the one with which we are concerned, viz., if he died surviving neither widow nor issue. In fact Phiroz died a bachelor after he had attained majority and in that eventuality clause 4(d) of the trust deed provided that the property coming to him should be divided into four equal parts and one part was to abide any will or codicil or any power of appointment which Phiroz might exercise and the remaining three parts were to be divided absolutely between Freny and Feroza, and if no power of appointment was exercised or if there was no provision in the will of Phiroz, then that part was also to go to Freny and Feroza equally. As neither of these two contingencies took place, therefore under the provisions of this trust deed it is clear that on the death of Phiroz the trustees held absolutely in equal shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble transfer if it contains any provision which in any way gives the settlor a right to reassume power directly or indirectly over the income or the assets. Therefore it is sufficient if such a power is given to the settlor. It may be given in any way. But the relevant and material question is whether the settlor has taken such a power to himself. Therefore, in my opinion, this deed of trust is a revocable deed of trust and falls under Section 16(1)(c) of the Act and therefore the income arising to Freny under this deed of trust must be taken to be the income of the settlors. That disposes of the first question. The second question is whether the income which Freny received from the property which was originally earmarked for Phiroz and which on the death of Phiroz is now held by the trustees absolutely in trust for Freny to the extent of a moiety can be deemed to be the income of the assessee within the meaning of Section 16(1)(c) of the Act. Now, as I have pointed out, under clause 4 of the deed on the death of Phiroz the trustees hold the property which was intended for him and which is described in schedule E in the events that have happened absolutely for Freny and Feroza ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39-40. On 15th January, 1936, the assessee and his wife executed a deed settling several properties upon trust for the benefit of their three children, two daughters, Freny and Feroza, and a son, Phiroz. At the time of execution of this deed Feroza and Phiroz were minors. Clause 1 of the deed provides that the trustees shall during the lifetime of the settlors or either of them pay the interest and income of the investments mentioned in schedules D , E and F to the trust deed to Freny, Phiroz and Feroza respectively. Clause 2 of the deed provides that after the death of the survivor of them the settlors the trustees shall hold the investments mentioned in these three schedules absolutely for the said three children respectively. Clause 3 provides for the contingency of either of the two daughters predeceasing the survivor of the settlors. Clauses 4 provides for the contingency of Phiroz, the son, predeceasing the survivor and it states that in that event the trustees shall hold the investments mentioned in schedule D to the trust deed upon the trusts therein mentioned. We are not concerned with the trusts enumerated in clauses (a), (b) and (c), in the events that have happen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portion of Section 16(1)(c) is all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be the income of the transferor. It is urged by Sir Jamshedji on behalf of the assessee that the words revocable transfer in this section require that the transfer should be revocable absolutely and unconditionally and that by reason of the fact that the transfer in this case could not be revoked under clause 10 of the trust deed without the consent of the wife and the children or any two of them, it is not a revocable transfer within the meaning of Section 16(1)(c). Apart from any authority, and reading the section by itself, I am unable to agree with this contention. It would involve my reading into the section words which are not there, and the Court is not entitled to do so unless it appears that giving effect to the section as it stands would lead to an obvious absurdity or inconvenience which could not have been contemplated by the legislature. No such position arises in this case. The words revocable transfer are well understood in law; and a transfer to my mind does not cease to be revocable because the power of revocation cannot be exercised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the applicability of the said proviso. Kania, J., although, as I read his judgment, he did not decide that the proviso did not apply, was inclined to take the view that since the probability of a retransfer was conditional on the death of the settlor's wife the case did not fall within the first proviso. On the other hand, Chagla, J., clearly came to the conclusion that the terms of the proviso were sufficiently wide to cover the case in which the retransfer to the settlor was conditional. With great respect to the learned Judges, these observations were to my mind obiter, and it does not appear to me to be necessary, for the purpose of deciding the reference before us, to determine which is the correct view of the first proviso to Section 16(1)(c). That proviso deals with cases where a trust is not in fact revocable but is deemed to be revocable by reason of certain provisions contained therein. That is not the present case before us, and whatever may be the correct view of the first proviso, since it does not arise in the determination of the reference before us I do not wish to express any opinion with regard to it. The correct interpretation of that proviso, to my mind, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
