9911796707
TMI Blog1992 (12) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... ust Deed dated 11-11-1974, executed between him as the settlor or the author of the Trust and the trustees being HUF consisting of himself and his wife, thereby, creating a Trust known as Mahavir Prasad Jaipuria Family Trust, for the benefit of the cestui qui trust, being the two sisters of the settlor, one sister-in-law of the settlor and three Private Limited Companies of which the Settlor is one of the shareholders and directors. In the preceding assessment year 1975-76 as the Assessing Officer opined that the Trust was not an irrevocable one, he referred the issues being vital to the Inspecting Assistant Commissioner under section 144A for his guidance on the subject. The issues raised were two. The first was as to whether Shri Jaipuria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added to the total income of the assessee for this assessment year. Thus, the total income was ultimately computed at Rs. 20,642 in the assessment under section 143(3) of the Act for the year in question resulting thus in an addition of Rs. 4,277. On appeal, this was confirmed. Hence the instant second appeal by the assessee. 3. The learned Counsel for the assessee submitted that section 63(a) of the Act does not at all apply to the instant case, as the Trust created is an irrecoverable one. There is no power or right for the settlor to receive any income directly or indirectly. Clauses 4 and 5 of the Deed may be seen. The former clause suggests clearly that this is a discretionary trust and not a specific Trust, the shares are being inde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law, in facts and circumstances of the case, the Appellate Officer too erred in upholding the finding of the Assessing Officer that the settlement upon irrecoverable trust by the assessee of a portion of the property at 8, Prithviraj Road, New Delhi was a revocable transfer and thereby in confirming the inclusion of Rs. 4,277 in the assessment. 4. On the other hand, the learned representative for the Revenue countered THAT: Under the Trust Deed, the trustees in their absolute discretion would give the whole or part of the income of the trust to any of the beneficiaries to the entire exclusion of one or more of them and in such manner as thought fit. Under these circumstances, the trustee could transfer any part of the income or corpus of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny case laws have been cited in support of the stand of the assessee as listed in para. 2.2 of the order impugned itself. along with brief propositions of law, besides reply dated3-12-1977of the assessee to the query of the Assessing Officer and that of28-1-1978to the Inspecting Assistant Commissioner. We are able to find the stand of the Revenue as a weak one for the reasons following. 5.2 The relevant provision of section 63 of the Act does not contemplate mere possibility of the property or income going back to the transferor but the reservation or provision of a definite right to retransfer or reassume as the original transferor. A perusal of the Deed of Trust shows that there is no provision or reservation that gives the transferor a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgment in the case of CIT v. Ratilal Nathalal [1954] 25 ITR 426 (SC) strengthens the submissions of the assessee. This decision is the affrmation of the view of the Hon'ble Bombay High Court. It has been held that where a settlement is, however, made by an HUF and there is a retransfer of asset or income to one of the members of the family as individual and in the capacity of the member of the family, the transfer would not be regarded as revocable. In other words, in the case of such a settlement of joint family property, if a member who has executed the settlement as representing the joint family is given a beneficial interest in the income in his individual capacity and for this personal benefit, that would not be a case of retransfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferor, the settlor. 5.5 Even otherwise, the provisions of the Trust are such that the trustees have the discretion whether or not to give any benefit out of the settled property to any particular beneficiary. Indeed there is no specific or definite provision in the Deed giving the transferor a right to reassume power or retransfer to the same effect reserved by the transferor. We further find that the settlor is not included as beneficiary but is only a shareholder or a Director of the Companies having no definite right to get anything but are merely included within the possibility of receiving something. It is also a well-settled proposition of law as laid down in the famous case of Soloman v. Soloman that no part of asset or income of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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