9911796707
TMI Blog1991 (6) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... he circumstances of the case, the Tribunal was justified in holding that only half of the income from the residuary property of the late Shri Pestanji Contractor could be taxed in the assessment of the assessee for the assessment years, (a) 1970-71 and (b) 1971-72 ?" The facts leading to this reference, briefly stated, are as follows: The assessment years under reference are 1970-71 and 1971-72. The assessee, Pirojshah P. Contractor, since deceased was the son of one Pestanji Contractor. Pestanji Contrator died on August 16, 1941, leaving a will dated June 4, 1941, and a codicil dated July 23, 1941. Pestanji Contractor died leaving behind him his widow, Jerbai, three sons, namely, Pirojshah (the assessee), Manekshah and Nadirshah and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is order was passed on the basis of a deed of assignment executed by the assessee. The Commissioner of Income-tax passed an order under section 263 of the Act holding that the entire income derived from the residuary property was liable to be taxed in the hands of the assessee and, therefore, the assessment order passed by the Income-tax Officer for the assessment year 1970-71 to the extent that it taxed only half of the income from the residuary property in the hands of the assessee was prejudicial to the interests of the Revenue. He, therefore, directed the Income-tax Officer to assess the whole of the said income in the hands of the assessee and revise the assessment accordingly. It may be mentioned here that, before the Commissioner pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a bank in fixed deposit was not taxable in his hands. Being aggrieved by the decision of the Appellate Assistant Commissioner, the assessee and the Revenue preferred appeals before the Tribunal. These appeals and the assessee's appeal against the Commissioner's order under section 263 of the Act were heard together and disposed of by the Tribunal by a common order dated August 28, 1976. The Tribunal took the view that the assessee was liable to be assessed only in respect of half the income derived from the residuary property. It held that the assessee had acquired a right to receive income derived from the residuary property under the will of his father and that he had a right to assign such right in favour of his children. What th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the income should be given to Smt. Shaheram, wife of Pirojshah, and the benefit of the children of Pirojshah (children include sons and daughters) and Shaheram should keep an account of it. After the death of Jerbai and Pirojshah the remaining movable or immovable property which I have at present or any property I may earn hereafter or get in inheritance or that which reverts to me as provided in paras 13, 14 and 15 of this will or any property mentioned in this will whose disposition is considered illegal and/or any property which is life (sic) be mentioned in this will, all such property should be divided in three equal parts and allotted with ownership rights to the children of Pirojshah, Nadirshah and Manekshah, respectively. In case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esiduary property during his lifetime. There is nothing in the will also which prevented the assessee from assigning his right to receive income. The assessee was, therefore, within his right in executing the deed of assignment on December 6, 1951, transferring or assigning his right, title and interest in half of the income of the residuary property in favour of his children. In CIT v. Smt. Kasturbai Walchand Trust [1967] 63 ITR 656 (SC) the facts were as follows : Under a trust created by Seth Walchand Hirachand and his wife, Bai Kasturbai, the trustees were to pay the income from the trust properties, after defraying expenses, to Bai Kasturbai during her lifetime. Under clause 8 of the deed, from and after the death of Bai Kasturbai, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to contract so as to transfer her interest under the deed of trust, and by executing the deed dated July 21, 1955, she surrendered all her rights. The right which had accrued to her under clause 7 of the deed of trust was the right to use certain immovable properties and to receive the net income arising from the trust properties. The right to receive the income arose because of the obligation laid on the trustees to pay the net income to her during her lifetime. That was clearly the right as a beneficiary under the trust and when she executed the indenture dated July 21, 1955, she surrendered that right in favour of the trust for charitable purposes, so that her right became extinguished. The above decision of the Supreme Court support ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
