TMI Blog1960 (9) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... ners and also his wife. On April 10, 1953, a disruption of the joint Hindu family took place and the assets were partitioned. The assessee received 400 shares of the Simbhoali Sugar Mills Private Ltd. among other assets of the joint Hindu family. He was also assigned the obligation to pay off a debt of nearly ₹ 4,00,000 which was contracted by the joint Hindu family and was due to Rai Bahadur Seth Jessa Ram Fateh Chand. On April 14, 1953, the assessee executed a deed of trust whereby he constituted a trust in respect of 300 out of the 400 shares of the Simbhoali Sugar Mills and the trustees appointed under the trust undertook to accept the obligation and to carry out the objects of the trust. The objects of the trust were, in the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons a little more fully, and I may set out the paragraph from his order which deals with this matter: The settlor in this case, no doubt, transfers certain assets to the trust but the income from these assets is not utilised by any person other than the appellant himself. It is his own liability that he has arranged to wipe off by a legal arrangement which unfortunately does not escape the clutches of section 16(1)(c) first proviso. This is not a case where income is irrevocably transferred to any person other than the settlor himself. Accordingly, there is no doubt that in the arrangement contemplated in the trust there is direct retransfer of the income to the settlor himself. The Income-tax Officer was, therefore, quite right in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person by virtue of a revocable transfer of assets shall be deemed to be income of the transferor : Provided that for the purposes of this clause . . . a transfer shall be deemed to be revocable if it contains any provision for the re-transfer directly or indirectly of the income or assets to the . . . transferor, or in any way gives the . . . transferor a right to reassume power directly or indirectly over the income or assets. I have left out the words which did not apply in order to clarify the position. It, therefore, follows that section 16(1)(c) deals with a transfer of his assets by the assessee. If the transfer is irrevocable, there is no question of the income from those assets being considered the income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t deed four trustees were appointed of whom the assessee himself was one. Three hundred shares having considerable value were transferred to the trust. The exact value of these shares is not given on the record of this case, but from the statement of the Department it is clear that the dividend for one year on these shares was more than ₹ 65,000, and it may, therefore, be assumed that the shares were worth not less than ₹ 6,00,000 if it is assumed that these shares carried the by no means large, dividend of 10 per cent. If that be the case, then it will be seen that the assessee divested himself of considerable property in order to pay off a debt which could have been liquidated by the sale of a little more than half of these sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind are frequently met with, and when the object of the trust is to provide for the education and welfare of the children and grandchildren of the maker of the trust, then the best persons to see that the object of the trust is carried out properly are the relatives of the beneficiaries. Our attention has been drawn to two cases which, in my view, seem to be somewhat in point. The first of these is Ramji Keshavji v. Commissioner of Income-tax [1945] 13 ITR 105 . In this case property was transferred to a trust and it was provided that the income was to be paid to the wife of the maker of the trust during her lifetime. She was to maintain her minor children and run the household during her lifetime. After her death the income from the tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax [1951] 20 ITR 307 . In that case the facts, however, were wholly different, and the decision of that case has no bearing whatsoever on the matter before us. I, therefore, find that in this case there has been no retransfer of the income from the trust property to the author of the trust, nor does the trust make any provision whatsoever which entitles him at any time named or in the future to reassume power over the income of the assets directly or indirectly. That being so, the case does not fall within the mischief of the first proviso, nor is the case covered by section 16(1)(c) ; the income from the shares must be deemed to be the income of the trust and not of the assessee. In this view of the matter the first question whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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