TMI Blog1986 (9) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer and that was from the donor to the trust. There was no gift to the minors directly' and is not the above finding wrong, unreasonable in law, substance and reality ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law, substance and reality in holding that the business was not a property on which the trust was declared ? (3) Whether, on the facts and in the circumstances of the case, and in view of the fact that the donations to minors as per clause 1 of the trust deed total only to Rs. 2,48,000 whereas the total contribution from the minors to the corpus, i.e., Rs. 2,82,000, as per clause 17 of the deed leaving a difference of Rs. 34,000 to be related back to the original sources, the Tribunal is correct in law and fact in finding that 'donations amounting to Rs. 3 lakhs is made the subject-matter of the trust' and is not the order of the Tribunal vitiated and the trust invalid also for the non-compliance of provisions of section 7 of the Indian Trusts Act ? (4) Whether, on the facts and in the circumstances of the case, an assessment in the status of an association of persons is valid ? " The crucial point for considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AS THE BENEFICIARIES, Viz., Mary Varghese, on behalf of her minor daughters, (1) Laizamma Varghese and (2) Rosalin Varghese (hereinafter referred to as the beneficiaries, which expression shall, wherever the context permits, mean and include their legal heirs), has transferred and assigned to the trustees upon trust the sums referred to in clause 17 against their respective names subject to the powers and provisions hereinafter expressed and declared and have agreed with the 'founder trustee' to deliver to the said trustees properties, furniture, machinery, stock-in-trade and other properties and chattels and book debts as per the business balance-sheet of St. George Umbrella Mart, Alleppey, as a going concern on and from the 1st day of Chingam One Thousand one Hundred and Forty-seven M. E. in consideration of the said trustees agreeing to discharge the liabilities, such assets and liabilities being specifically described in a separate agreement entered into for assignment unto the trustees absolutely. WHEREAS T. J. Joseph and his mother-in-law have transferred and assigned to the trustees upon trust the sum of Rs. 50,000 (Rupees Fifty Thousand only) as nominees of Minor T. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht against the trustee as owner of the trust-property; and the instrument, if any, by which the trust is declared is called the 'instrument of trust'." But the question whether what is styled as a trust deed does in fact constitute a trust at all, apart from the requirements of section 7 of the Trusts Act, was not a question before the authorities, and, therefore, we shall not deal with it. The question 'which we must necessarily deal with is whether the trust, purported to have been constituted under annexure A, is a validly created trust in compliance with section 7 of the Trusts Act which says : " 7. Who may create trusts. A trust may be created (a) by every person competent to contract, and (b) with the permission of a principal civil court of original jurisdiction, by or on behalf of a minor; but subject in each case to the law for the time being in force as to the circumstances and extent in and to which the author of the trust may dispose of the trust-property". The section though couched in what may appear to be a language of permission does in fact contain a condition precedent in non-compliance with which no trust is permitted to be created. The section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade the contributions. The contributions, in our view, are made by the named beneficiaries or by the nominees who contributed on behalf of the minor beneficiaries. In other words, apart from the three major beneficiaries who contributed in their personal capacity, all the other contributions came from nominees who acted on behalf of the minors. Thus the contributories are at once the beneficiaries and the authors of the trust. On the face of it, the instrument discloses that out of the nine authors, six are minors on behalf of whom their guardians or nominees acted admittedly without obtaining the permission of the civil court. The instrument, in our view, must be understood in terms thereof and independently of any other document which does not form part of it. The terms of the instrument being clear, the Tribunal misdirected itself in allowing extraneous evidence to contradict, vary, add to or subtract from those terms. The assessee's counsel submits that even if the trust were to fail by reason of non-compliance with the mandatory provisions of section 7(b) of the Trusts Act, such failure can only be partial, in so far as the trust relates to minor persons and the trust sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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