9911796707
TMI Blog1982 (12) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... essee to her son's wife or son's minor child. While the revenue is in appeal against the deletion of addition on merits, the assessee is in cross-appeal against the validity of reassessment proceedings upheld by the AAC. 2. The facts in brief are that the ITO completed the original assessment on 28-1-1977 on the basis of return filed in December 1976 which showed nil income against column 12(b) of the return pertaining to 'income arising to spouse/minor child', etc. On 30-5-1980, the ITO received a letter from his counterpart [Circle II(8), Madras] stating that three private trusts were created by the assessee in favour of three minor grandchildren separately and the beneficiaries had filed their returns and the assessments were completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transfer of assets to the assessee's son's wife or son's minor child and, consequently, the change of ownership to the beneficiaries and as the assets were transferred to the trustees the trustees were the owners and the interest of the beneficiary was only a right against the trustee as regards the income of the trust property. Since the test is not satisfied, he held that section 64(1)(vi) was not applicable and the inclusion of income of the beneficiaries was, consequently, deleted. He has also referred to the decision of the AAC in the case of Smt. Bhanwari Devi Gandhiya, Madras, which has been duly confirmed by the Tribunal. 4. The learned departmental representative has been heard at length. His main contention was that section 64 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, he reiterated the contention before the authorities that it was not valid. 6. In reply, the departmental representative reiterated his contention that the transfer through the medium of trust amounted to indirect transfer and the inclusion of income could be justified on the ground that the beneficiary had interest in expectancy. 7. We have duly considered the rival contentions urged on behalf of both the parties. At the outset, we have to observe that the orders of the authorities clearly show that the ITO had obtained information from his counterpart after the completion of the original assessment as to the particulars of the trusts created by the assessee and had reasons to believe that income chargeable to tax has escaped assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years after the execution of settlement or such other date as may be appointed by the trustees. The trustee was enjoined to pay or apply the net income of the trust towards maintenance, education and other benefits of the beneficiary. The trust deed also enumerates the various circumstances according to which the trust property has to be applied on the date of distribution. Therefore, there is a valid trust created by the assessee in favour of the beneficiary and in view of such trust, the income, if any, arising to the beneficiary cannot be clubbed with the income of the transferor or the settlor as held by the Bombay and Calcutta High Courts. Therefore, we agree with the view of the AAC that unless there is direct transfer or indirect tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
