TMI Blog1979 (1) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on 24th April, 1946. The payment to the child was to be made for ten years from the date of the trust deed. A further direction in the trust deed was that if the said child died during the said period of 10 years, then the trustees were to accumulate the net income for the remaining period of ten years from the date of the trust deed. The trust deed then provided as follows : " Subject as aforesaid from and after the expiration of the said period of ten years from the date of these presents, in trust to pay the trust funds to Perin Dhunjishaw Netarwala and Dhunjishaw Maneckji Netarwala in equal shares absolutely. " Some other contingencies were also provided for in the trust deed such as that if any one of the two persons mentioned above, i.e., Netarwala and his wife was dead at the expiration of the period of ten years, the trust funds were to be given to the survivor and if none of them was alive, then the trust funds were to be paid to the child of Netarwala and his wife or if more than two, to all of them in equal shares. A further provision was made that if there were no children or child of the Netarwalas on the expiration of the said period of ten years, then 1/5th o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. The assessee was aggrieved by the order of the Tribunal and the following question has, therefore, been referred at his instance to this court under s. 66(1) of the Indian I.T. Act, 1922 : " Whether, on the facts and in the circumstances of the case, it was rightly held that 4/5ths of the interest income from the trust fund was assessable in the hands of the assessee ?" Mr. Khanna appearing on behalf of the assessee has vehemently contended that the sum of Rs. 25,000 which the assessee's wife received after the expiry of 10 years as stipulated in the trust deed was not received by her by virtue of any transfer made by her husband. According to him, the moment Netarwala had created a trust in respect of the amount of Rs. 40,000, he ceased to have any power of disposal of the said amount and, if at all, the amount was received by Netarwala's wife from the trustees constituted by the settlors including Netarwala's father-in-law, Bharucha. The argument appears to be that Netarwala's wife received the amount in her own right and it has been received by her from an association of persons and not from her husband Netarwala and if at all any provision was attracted, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etely out of the way. It is true that the moneys which are paid to the wife of Netarwala are paid in pursuance of the direction given to the settlors and it could be said that the moneys are received by her in her own right which flows from the recitals in the trust deed. But it must be remembered that this circumstance does not take the case before us out of s. 16(3)(a)(iii). That circumstance may be relevant for taking a case out of cl. (b) of s. 16(3), because cl. (b) will cease to operate the moment the trust funds are delivered to the beneficiaries and the trust has come to an end. To the same effect are the observations made by this court in Behramji Lalkaka's case [1948] 16 ITR 301 (Bom) on which Mr. Khanna has relied but which have no relevance to the case before us. The question in Behramji Lalkaka's case, was whether the income received by the beneficiaries after the trust had come to an end, could be brought to tax under s. 16(1)(c) of the Act. We are not in this case dealing with the question as to whether the income earned by the wife after she had received the money after the expiration of the period for which the trust was made could be brought to tax under s. 16(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made in different ways. It was then observed in that case (p. 110) : " It is true that the section says that the assets must be those of the husband, but it does not mean that the same asset should reach the wife. It may be that the assets, in the course of being transferred, may be changed deliberately into assets of a like value of another person, as has happened in the present case. A chain of transfers, if not comprehended by the word 'indirectly', would easily defeat the object of the law which is to tax the income of the wife in the hands of the husband, ....... " It may be remembered that C. M. Kothari's case [1963] 49 ITR 107 (SC), was a case of cross-transfers which were so intimately connected that they formed part of a single transaction though the two transfers were not mutual, i.e., each transfer did not constitute consideration for the other in the technical sense. It will, therefore, have to be decided in each case on its own facts as to whether the assets coming to the wife have come by way of a transfer indirectly made by the husband. In this case, we have merely to go to the recitals in the trust deed for these purposes. A bare reading of the trust deed wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be for adequate consideration. Mr. Khanna has relied, on a decision of the Patna High Court in Rai Bahadur H. P. Banerjee v. CIT [ 1 941) 9 ITR 137 [FB]. In support of the argument that the word " consideration " appearing in s. 16(3)(a)(iii) is used in its legal sense as it is used in connection with the transfer of assets and has argued that since the word has not been defined in the Transfer of Property Act, it must be given a meaning similar to the meaning which has been given to it in the Indian Contract Act. For the purposes of the present case, however, it is not necessary for us to go into the question as to whether the consideration contemplated by s. 16(3)(a)(iii) need not necessarily be monetary or whether it is permissible for the consideration to flow not from the wife alone but it could be even from a third person, because even on facts we are inclined to take the view that there was no adequate consideration for the transfer of the assets in favour of the wife. What is argued before us is that the consideration for Netarwala to ultimately transfer half of the trust funds by making securities of the value of Rs. 40,000 subject to the trust was the offer by Bharu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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