1994 (2) TMI 12

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..... of Sri Srichand Lulla, and the other for the benefit of two other minor children of Sri Ramchand T. Lulla, constituting them as trustees. The trustees had invested the amounts towards capital in two firms, Messrs. Sri Ram Sons and Messrs. Amar Sons, the share of income from which worked out to Rs. 14,379 and Rs. 5,724, respectively, in the previous year relevant to the assessment year 1980-81. The Income-tax Officer sought to add these amounts to the total income of the father of the minors, the assessees before us, under section 64(1)(iii) read with Explanation 2A thereto of the Income-tax Act, 1961. The Appellate Tribunal considered clause 4 of the trust deeds, which is as follows: " 4. The trustees shall be entitled : (a) Upon trust .....

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..... he current year and the said income could not, therefore, be aggregated under section 64(1)(iii) of the Act. At the instance of the Appellate Tribunal, the following questions were referred: " (1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that no benefit arose to the beneficiaries to attract the provisions of section 64(1)(iii) ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in deleting share incomes of minor children included in the hands of the assessees under section 64(1)(iii) of the Income-tax Act ? " The questions before us are practically concluded by the decision of this court in CIT v. T. Ponnaiah [1988] 172 IT .....

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..... judgment has dealt with those provisions, and it was found that since the income has to be accumulated until the minor attains the age of majority, there can be no vested interest in the deferred benefit. The third point urged by learned counsel for the Revenue was that in respect of the discretion given to the trustees to spend the funds, for the benefit of the minors, it should be considered that the minors had the right to the income and, therefore, it should be taken as an amount accruing to the minors and benefit arising to them. Here again, the Bombay High Court actually followed the decision of the Supreme Court in CIT v. Manilal Dhanji [1962] 44 ITR 876, wherein it was clearly laid down that if the minor derives no benefit in the r .....

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