9911796707
|
Home
Issues:
- Validity of trust deed and rectification - Burdening of minor beneficiaries with losses - Retroactive effect of rectification deed Analysis: The judgment involves an appeal by the Revenue against the order of the AAC deleting the income of a trust from the total income of the assessee. The primary issue revolves around the validity of the trust deed and rectification. The assessee, a partner in a firm, declared her interest in the firm as a trust property for the benefit of certain beneficiaries, including minors. The Revenue contended that the trust deed burdened the minor beneficiaries with losses, rendering it invalid. Conversely, the AAC held that the rectification clarified the real intention of the trust author, and the trust was valid as it did not burden the beneficiaries beyond the corpus. Regarding the retroactive effect of the rectification deed, the Tribunal analyzed whether the rectification operated to amend the principal deed from inception or only from the date of rectification. The Tribunal cited the Specific Relief Act, emphasizing that if an instrument does not express the real intention, rectification can be sought retrospectively. The Tribunal concluded that the rectification, being clarificatory, amended the provisions of the principal deed from inception, thereby validating the trust. Another critical issue addressed was whether the trust of the property was valid, considering the objection that the property conveyed was an interest in the firm subject to losses, constituting an onerous gift to minors. The Tribunal determined that the property was not burdened by any obligation beyond the corpus held in trust, and the minors were not obligated to accept the property burdened with losses. Consequently, the Tribunal upheld the AAC's decision that the trust was valid, and the income arising to the trust should be excluded from the assessee's total income. The appeals by the Revenue were dismissed, affirming the AAC's order.
|
