TMI Blog1957 (9) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the relevant part of it is: ......I, Tulsidas Kilachand.......hereby declare that I hold 244 shares of Kesar Corporation Ltd., and 120 shares of Kilachand Devchand and Co. Ltd.,.............upon trust to pay the income thereof to my wife Vimla for a period of seven years from the date hereof or her death (whichever event may be earlier) and I hereby declare that this trust shall not be revocable. Now, although the question has been raised in a general form, it is clear that the income can be included in the income of the assessee only if it falls under section 16(1)(c) or under section 16(3)(b). The Tribunal took the view that it did not fall within section 16(1)(c), but that it did fall within section 16(3)(b). Turning t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arises by virtue of a settlement which is not revocable for a period exceeding six years or during the lifetime of the person and it is not alleged that the settlor derives any direct or indirect benefit from this income. The Tribunal, therefore, was, in our opinion, right in coming to the conclusion that the income does not fall under section 16(1)(c). Turning now to section 16(3)(b), it is in these terms: In computing the total income of any individual for the purpose of assessment, there shall be included- (b) so much of the income of any person or association of persons as arises from assets transferred otherwise than for adequate consideration to the person or association by such individual for the benefit of his wife or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... says that although the transfer of trust property to a trustee is an essential prerequisite for the creation of a trust under section 6, where the settlor himself is a trustee this section provides that no transfer is necessary. Now, it is no doubt true that in terms the section so states; but the object of this particular provision in the Indian Trusts Act was pointed out by Chandavarkar, J., in the case of Bai Mahakore v. Bai Mangla [1911] 13 Bom. LR 564. The learned Judge, at page 569, pointed out: Section 5 of the Trusts Act must be read with section 6. Section 5 lays down what may be called the extrinsic conditions necessary to create a trust. In other words, it prescribes the mode of its creation. Section 6 lays down the intrinsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trustee is intended merely to convey that no deed or document of transfer as such is essential in the sense in which the word transfer was defined in the Transfer of Property Act and not that there need be no transfer of property, because no trust can come into existence unless the trust property is divested from the settlor and vested in the trustee. Where the settlor and the trustee are the same individual, no formality of a transfer need be gone through and a declaration of trust is sufficient but there is no doubt in our mind that the effect of a declaration of trust is to divest the settlor of the property and to vest the property in himself as the trustee, which is a transfer of property which may perhaps be more appropriately defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve and affection which constitutes adequate consideration in law. That, no doubt, is true in the context of an ordinary agreement; but we are here dealing specifically with a provision which provides that an income which is for the benefit of the wife or a minor child of the assessee shall be deemed to be the income of the assessee. One must presume that in all normal cases the existence of the relationship of husband and wife or parent and child imports natural love and affection; and were we to accept the argument of Mr. Kolah, this particular sub-clause would have to be rendered nugatory because natural love and affection would ordinarily exist in such a relationship and the sub-clause can, if at all, apply only to a rare case where natu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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