9911796707
TMI Blog1989 (1) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... trust by name "Ashok Trust". In the first trust, the assessee in T. C. Nos. 114 to 119 of 1979 had a 5/34ths share and in the second a 10/75ths share. The assessee in T. C. Nos. 108 to 112 of 1979, L. Gouthamchand, had a 10/34ths and 15/75ths share, respectively, in the two trusts. The first trust was created for the benefit of the prospective wife of the minor son of Lalchand, viz., Suresh. Likewise, the second trust was created for the benefit of the would-be wife of Ashok, another minor son of Lalchand. The provision was made in the first trust deed that if Suresh did not get married before attaining the age of 30, or died without marrying, the corpus of the trust as well as the accretions should be conveyed to the other son, Ashok. In the second trust deed also, a similar provision was made that if Ashok did not get married before attaining the age of 30 or died without marrying, the amounts set apart under the trust with the accumulated income should be conveyed to the other son, Suresh. In the course of the assessment proceedings for the years in question, the Income-tax Officer assessed the share income of the assessees from the trust funds in their hands on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in CIT v. P. Bhandari [1984] 147 ITR 500 (Mad). On the other hand, learned counsel for the Revenue contended that the trusts in question would fail, in the event of Suresh and Ashok not being in existence at that point of time contemplated under the relevant clauses of the trust deeds and that it would have the effect of creating a resulting trust in favour of the assessee and his wife as to justify the assessment of the share income of the assessees in the trust funds in their hands. Reference was also made in this connection to the decision reported as Indian Molasses Co. Ltd. v. CIT [1959] 37 ITR 66 (SC). We may now refer to the relevant clauses, viz., clauses (5) and (6) in the deed creating "Suresh Trust" dated October 14, 1968, executed by Lalchand. They run as follows : "(5) As soon as the said Suresh gets married, the capital amount together with all its accretions accrued and earned up to that date including the balance of income that had arisen thereon shall be conveyed by the trustees to the said wife of Suresh absolutely, provided she is of 21 years of age, otherwise the same shall be conveyed to her on her attaining the age of 21 years. (6) If Suresh do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o is the actual person who is to be benefited by the trust, so long as the trust deed gives the description of the person to be benefited, the beneficiary cannot be said to be uncertain or that the trust would be otherwise invalid. It was also laid down that the initial object of the trust is to benefit the would-be daughter-in-law through the second son and if that failed for the reason that he did not marry during his lifetime, the other beneficiary would be the would-be daughter-in-law through the first son and only if those clauses failed, then, the question would arise whether the ultimate object was either vague or indefinite and that with reference to the beneficiaries, who are either named or can be ascertained, the trust cannot be said to be invalid. In this case also, under clause 6 of the deed of trust, referred to earlier, provision is made to the effect that if Suresh did not get married before attaining the age of 30 or died without marrying, then, the trustees were directed to convey the capital amount as well as the accretions to the other son, Sri Ashok. Similarly, in the other trust deed relating to "Ashok Trust" executed by the wife of the assessee in T. C. Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 to 119 of 1979, viz., Suresh and Ashok, had been in existence during the period in question and had also married, as we were informed at the bar, there is no scope for applying section 83 of the Indian Trusts Act at all on the facts and the circumstances of the case. We now refer to the decision in Indian Molasses Co. (P.) Ltd. v. CIT [1959] 37 ITR 66 (SC), relied on by the Revenue. By a trust deed executed by the assessee-company, a provision was made for the payment of a pension to its then managing director for the term of his life, should he live up to the age of 55 and then retire. Under clause 2 of the deed of trust, the trustees held a sum of 8,208-19-0 pounds, which was paid to them and they held the rupee equivalent of 326-14-0 pounds which was the annual payment, which the assessee-company undertook to make upon a trust and spend the same and the income, if any, in taking out a deferred annuity policy with an insurance society in the name of the trustees on the life of the managing director. The policy was to cover the annuity of 720 pounds per annum payable to the managing director for life from the date when he would attain the age of 55 years. Under clause 3 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
