9911796707
TMI Blog1981 (6) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... uly, 1952 by (1) Rukmani Ammal wife of Shri T.N. Krishnaswamy Chettiar and (2) Venkatammal, wife of Shri T.N. Venkatarama Chettiar for the purpose of providing for marriages and subsequent post marriage functions of their grand daughters by their several sons then in existence and of such other grand daughters as may be born thereafter to the sons of the donors. Movable properties and assets consisting of shares of certain companies of the aggregate value of Rs. 50,000 were settled upon the trust and six persons named in the instrument were appointed as trustees. The said instrument of the trust besides containing a direction as to when and how the trustees should meet the marriage expenses of the various beneficiaries, also provided that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared on the date of distribution before the trustees. 3. It is common ground of the parties that the trust as claimed to have been orally declared by each of the beneficiaries of the parent trust namely Rukmani Venkatammal Trust and the administrative details of which were subsequently set out in a written declaration is a discretionary trust. If the assessment of these trusts were governed by ss. 160 to 164 tax levied on the income of the trust by the ITO at the specified rate of 65% is correct. The dispute between the parties however is on the question as to whether the provisions of ss. 160(1)(iv) and 164 are applicable to the facts of this case. According to the assessee s stand the provisions of s. 164 which authorise the charge of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt invested by each person representing the share of the residue on the distribution and involving the question as to whether in respect of such amount there was an effective and valid trust created orally by them so as to make such interest income not the individual income but that of the respective trust. The finding of the Tribunal in these cases is that oral declaration of the trust can be made in respect of the movable properties on each of the cases considered by them and the Minutes of the Meetings of the trustees and the subsequent declaration furnishes sufficient evidence as to the creation of the trust. The submission of the ld. Rep. for the assessee on the above stated facts is that since the trust in each of the cases under app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered the relevant facts in this case and the contentions of the parties. The fact that the trust in regard to movable property as in this case can be created by an oral declaration having regard to the provisions of s. 5 of the Indian Trust Act and in this case it has been so created and had to be valid by the earlier order of the Tribunal referred to above is not in dispute. The question is whether the subsequent declaration of 14th August, 1972 itself creates the identical trust and it stands to reason that if the trust in respect of certain movable properties is validly created by an oral declaration the subsequent declaration in writing cannot create or bring into existence the same trust, but can merely evidence it even if it seek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajor children and grand children and to give assistance monetarily or in kind to the poor and needy. The procedural and administrative details regarding this trust and the owners of trustees will be given by me in a separate document on a later date." The clause is merely of a clarificatory nature as there is nothing in the declaration to show that it was originally revocable and ordinarily a trust is presumed to the irrevocable unless there is provision to the contrary. As regards the second modification of inclusion of further beneficiaries is concerned the relevant portion in cl. 5 reads as under: "On the said date as decided above there are major children or grand children of the author the properties and other assets of this trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of income-tax, it is well settled that regard must be had to the state of affairs during the relevant previous year in which the income is chargeable to tax has arisen and not to future events which may or may not happen. If such being the position in law, as we understand it to be, it follows that the beneficiaries for the relevant previous year are those envisaged in the oral declaration of the trust and not one created by the instrument in writing. In the order of the ITO one of the reasons given by him is that if the assessee s claim has to be accepted it would mean that the assessee trust cannot be brought to tax at all not to speak of the application of the rate of 65%. Apart from the fact that such reason cannot avail for supp ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
