9911796707
TMI Blog1972 (9) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenditure of the assessee under section 4 and if so, under which sub-section of section 4 of the Expenditure-tax Act?" The only facts which need to be noticed are as follows: By a deed of settlement, dated 30th January, 1947, Sir Ness Wadia settled 1,001 fully paid ordinary shares of the Bombay Dyeing and Manufacturing Co. Ltd. upon trusts mentioned in the deed. The main trusts which need to be noticed were as follows: The net dividends, interest and income of the trust were in the first instance payable to the settlor's son, Neville Ness (the assessee in this case), for the period of his life. After his death the dividends, interest and income were directed to be divided in equal half for payment over of the one half of the net dividends, interest and income respectively to one Diana Claire Wadia, being the daughter of the assessee, for the period of her life for her sole and separate use and after her death for payment of the moiety or the corpus and income to all the children or any child of Diana absolutely and if more than one in equal shares. The other half of the net dividends, interest and income were direted to be paid over to Musli, the son of the assessee, for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was not for any consideration at all. Having regard to this finding Rs. 1,46,126 of the dividend income was included in the assessee's income for the year 1958-59. For the next year, i.e., 1959-60, he added Rs. 73,063 on the same footing in the income of the assessee. These findings were confirmed by the Appellate Assistant Commissioner in the appeals filed by the assessee. The Income-tax Tribunal rejected the contention made on behalf of the revenue and in that connection observed that : " One thing is clear from the deed of release, the minor children were not parties to the deed. The theory of acceleration usually arises in relation to gifts by will but it may apply to settlement..... the net result of this release is only that the subsequent interest of the grand-children got accelerated." The Tribunal discussed the true effect of the above deed and referred to certain authorities and held that the deed dated 30th March, 1957, did not constitute any transfer of property by the assessee and dismissed the appeals filed by the revenue. The first question referred to us relates to the above findings. Mr. Hajarnavis for the revenue has made the following contentions : Where l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into by the parties." The further observations were to the effect that the form of the transaction could be ignored and the real nature of the transaction could be ascertained by the court. In the case of Makhan Lal v. Nagendra Nath, the High Court of Calcutta, while dealing with a deed which was described as a surrender in connection with a partition effected, observed: " A surrender is a yielding up an estate for life to him that hath an immediate estate in reversion or remainder wherein the estate for life of years may merge by mutual agreement ; it is the falling of a lesser estate into a greater. Though a surrender may under certain circumstances amount to a transfer and operate as such, surrender of an interest in a tenancy which is non-transferable does not amount to a transfer." In the case of Commissioner of Income-tax v. Dadabhoy G. Broacha, questions were raised similar to the questions in the present case. On examining and scrutinising the deed on which reliance was placed by the parties the court came to the conclusion that the deed was in plain terms an assignment of life interest by the life tenant in favour of his wife and minor children. For that reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elerated and take effect in possession as from the date hereof to the entire exclusion of the releasor and of any benefit to him." Mr. Hajarnavis has submitted that the words in the operative clause (1) are the words for making of a transfer by the assessee of his life estate in favour of his daughter and son. We are unable to accept this submission because the operative clause (1) directly and clearly provides for complete surrender and release of all interests of the assessee in the trusts created by the original deed of settlement dated 30th January, 1947. Whatever came to the daughter and son of the assessee in consequence of this deed was the result of the provisions made in their favour as beneficiaries under the original deed of settlement dated 30th January, 1947. The transaction effected by the assessee by using the words in the operative clause, (1) did not create any interest of any kind in favour of the daughter and the son of the assessee. The provisions in the original deed of settlement were known to the assessee and he accordingly knew that by reason of his surrendering, releasing and extinguishing his life interest, the interest created in favour of his daughter a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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