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Validity of a trust settled for the benefit of an unborn child. Analysis: The case involved a trust created for the benefit of the first son of an individual who was unborn at the time of trust creation. The Income-tax Officer initially deemed the trust invalid as there was no existing beneficiary, resulting in the inclusion of income from the shares in the assessee's income. The Commissioner of Income-tax (Appeals) partially allowed the appeal, leading to the Revenue challenging the decision before the Tribunal. The Revenue argued that without a known beneficiary, the trust creation was invalid. However, the Tribunal disagreed and refused to refer the matter under section 256(1) of the Income-tax Act. During the hearing, the Revenue contended that a trust must have a definite and existing beneficiary to be valid, while the assessee's counsel argued that a clear description of the beneficiary was sufficient. The court outlined the essential elements for a valid trust, including the intention to create a trust, the trust's purpose, the beneficiaries, the trust property, and the transfer of property to the trust. It was noted that all conditions were met except for the presence of a definite beneficiary. The court highlighted the relevance of section 13 of the Transfer of Property Act, emphasizing that an interest created for the benefit of a person not in existence at the time of transfer must extend to the transferor's remaining interest for it to take effect. The court explained that a transfer to an unborn person is not directly possible under the law and must be done through a trust mechanism. In this case, the entire interest in the property was for the benefit of the child to be born, and the trust deed also addressed the scenario if the individual did not have a male child. Ultimately, the court upheld the Tribunal's decision, ruling in favor of the assessee and against the Revenue, affirming the validity of the trust settled for the unborn child. The judgment concluded with the question being answered in the affirmative, disposing of the reference.
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