9911796707
TMI Blog1976 (7) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1922?" The assessees are the trustees of a trust created by one Tribhuvandas by a trust deed dated March 31, 1932, and the question referred to arises with reference to the assessment year 1959-60, the relevant accounting year being Samvat year 2014. The trust deed provided that the trustees were to collect the income and after appropriating specified amounts for expenses were to pay the balance to the settlor during his lifetime and after his death to pay the balance to his wife, Jamnabai, and son, Shantilal. Clause 4(c) of the trust deed contained provisions as regards disposal after the death of the settlor and it is as under : " 4. (c) To pay the balance every month only for the purpose of carrying on the expenses of the family and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust property to the intent that the estate and interest for life of the Releasor in the trust property may merge and be extinguished in the reversion and inheritance thereof and that the trust property comprised in the said hereinbefore recited indenture of settlement dated 31st March, 1932, and the moneys or investments representing the same may become immediately vested in possession of the beneficiaries and......in pursuance of such his desire the Releasor doth hereby release and disclaim all that the power of appointment and the power reserved to him under the said hereinbefore recited indenture of settlement dated the 31st March, 1932, to the intent that the said powers hereby released may henceforth be extinguished and that the Rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted only to self-effacement and not transfer or attempt to transfer ; that such surrender of life interest by Shantilal had only the effect of accelerating the succession as provided by the trust deed. He, therefore, set aside the order passed by the Income-tax Officer and held that the sum of Rs. 2,000 which was set aside to carry out repairs, etc., was the only amount that was liable to be assessed at the maximum rate and the balance of the income of the trust was to be assessed either in the hands of the beneficiaries directly or in the hands of the trustees at the appropriate rate applicable to the beneficiaries. The revenue went in second appeal before the Tribunal. Before the Tribunal, only one contention was urged on behalf of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter was heard in appeal by the Tribunal. Before the Tribunal it was almost conceded that if relinquishment by Shantilal has the same effect for the purposes of the trust settlement as his death, then, under the trust settlement Shantilal's sons who were all majors on December 31, 1956, would be entitled to the trust income in equal shares. The question of assessing the trust income at the maximum rate would only arise if the said relinquishment by Shantilal has not the same effect as the death of Shantilal. In view of the execution of the deed of release by Shantilal what is the effect of such release is beyond doubt in view of the decision of this court in Shrimati Kasturbai Walchand Trust's case [1964] 51 ITR 255 (Bom) above refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earliest. The argument of Mr. Joshi is that by executing the release deed Shantilal attempted to transfer, assign or encumber his interest in the trust estate. It is not possible for us to accept this contention. The effect of the operative part of the deed of release executed by Shantilal is that thereby his entire interest under the trust deed in the trust estate is relinquished and even the powers of appointment which were conferred upon him are given up or surrendered. Such a thing cannot be treated or regarded as an attempt to transfer, assign or encumber his interest in the trust property. That being the position, the argument of Mr. Joshi that the provisions of paragraph (C) of clause 4(c) of the trust deed have come into operation c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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