TMI Blog2005 (6) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration for creation of the trust by way of settling a sum of Rs. 5,50,000, as corpus, the income from which is to be applied for the maintenance of the minor daughter Farida - Since in this case consideration has passed between the settlor and the trust the question of excluding the income from the purview of section 64(1)(vii) does not arise. – no infirmity in tribunal’s finding - - - - - Dated:- 30-6-2005 - Judge(s) : V. C. DAGA., A. S. AGUIAR. JUDGMENT The judgment of the court was delivered by A.S. Aguiar J.- The following common question of law is referred under section 256(1) of the Income-tax Act, 1961, for consideration of this court by the Tribunal in I.T.A. Nos. 3126/Bom/1983 and 446/Bom/1984 dated September 17, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., as trustees. The custody of the female child, Farida, was to be with the mother. The trustees had to pay the net income of the trust fund to Mehroo till the child attained eighteen years of age on November 30, 1988. Thereafter the income was to be directly paid to Farida till she completed thirty years of age. On her completing the age of thirty years, the trustees were to deliver the entire trust fund to the said Farida. During the minority of Farida, Mehroo had to spend 5/11th of the income received by her from the trustees for the education of the said child and the balance for her benefit and maintenance in such manner as the mother deemed fit and she was not accountable to anybody in that behalf. For the accounting year 1978-79, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aughter) or both." The Income-tax Officer by order dated September 26, 1981 held that the income was liable to tax as it fell within the ambit of section 64(1)(vii) on the ground that the assessee had settled an amount of Rs. 5,50,000 in trust for the maintenance of his minor daughter without any consideration. The Commissioner of Income-tax in his order dated April 19, 1983, upheld the finding of the Income-tax Officer. The concurrent finding of the two authorities below has been set aside by the Income tax Appellate Tribunal, holding that section 64(1)(vii) was not attracted and the assessee was therefore not liable to pay tax in respect of the amounts provided for the maintenance of the minor child Farida. The Tribunal accepted the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and make a declaration of the said trust in respect of the said amount. It may be noted that the Income-tax Officer is of the opinion that the trust has been created by the assessee in consideration of the wife Mehroo agreeing to grant-divorce to the assessee and not per se for the benefit of the minor child Farida. The consideration is divorce between the assessee and his wife. There is no consideration between the settlor and the trustees. The Income-tax Officer has therefore arrived at the conclusion that the trust was created by the assessee in order to avoid payment of tax. It is the contention of the Income-tax Officer that the provisions of section 64 enjoin that there must be consideration for the transfer of assets between the sett ..... X X X X Extracts X X X X X X X X Extracts X X X X
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