1950 (5) TMI 31

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..... re added to his own income. The assessee appealed, but on appeal the Appellate Assistant Commissioner came to the conclusion that these properties were the subject-matter of a bona fide trust and that the income from these properties belonged to the daughter and could not be regarded as part of the income of the assessee. The income was therefore excluded from the total income of the assessee for the purposes of the assessment. There was an appeal to the Appellate Tribunal and the Commissioner of Income-tax contended that the Appellate Assistant Commissioner was wrong in holding that the income from the trust property was not assessable as part of the assessee's income. The Appellate Tribunal however upheld the view of the Appellate Ass .....

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..... al life for her sole and separate use. There are provisions as to how the income is to be dealt with on the death of Aloka. But it is to be observed that the settlor retains no control whatsoever over that income and has no right to it. The argument before the Appellate Tribunal and before us is that by reason of clause (3) in particular of this deed the settlor has retained control over the income and therefore it must be regarded as his income for the purposes of taxation. Keliance is placed on Section 16 (1) (c) and the first proviso thereto of the Indian Income-tax Act. That section in so far as it is material is as follows :- In computing the total income of an assessee- **** (c) all income arising to any person by virtue .....

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..... er the income. It is merely a provision limiting the rights of the beneficiary to question certain acts of the trustee. The deed is an out and out settlement to the trustee and after the execution of this deed the trustee held this property upon certain trusts and he could not obtain any of the income without a breach of trust. Provisions are made to prevent frivolous litigation and prevent questioning the bona fides of the trustee, but those provisions do not have the effect of giving the settlor a right to reassume power directly or indirectly over the income or the assets. After this deed was executed the income of these properties belonged to the cestui que trust and if the settlor as trustee used this income he would be guilty of a .....

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