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TMI Blog1983 (3) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case, the Appellate Tribunal was justified in relying upon the provisions of section 9 of the Indian Trusts Act, 1882, and holding that Smt. Usha Devi could not transfer her interest in Princess Usha Trust ? (4) Whether, on the facts and circumstances of the case, the Appellate Tribunal was justified in holding that the provisions of sections 8 and 9 of the Indian Trusts Act, 1882, were applicable in the case of the assessee-trust ? (5) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in confirming the finding of the CIT(A) that the minors, Ranjit and Dalip, had no legal title vested in them on the date of transfer, viz., 30th March, 1974, and what they held could not be transferred in terms of section 6(a) of the Transfer of Property Act? (6) Whether, on the facts and circumstances of the case, the Appellate Tribunal was justified in confirming the finding of the CIT(A), that the 1st A.D.J., Indore, while passing his order u/s. 8 of the Hindu minority Guardianship Act, 1956, did not go into the question whether the minors could be identified as remainder men in terms of the trust deed dated April 10, 1950, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Act because by virtue of the other assets and income of the minors, the aggregation of their beneficial interest in the trust would result in only burdens and no benefits. Permission was, therefore, sought by the applicant-guardians of the minors to transfer to an educational trust, by gift or otherwise, the remainderman's beneficial interest of the minors in the private trust constituted by Late Maharaja Yeshwantrao Holkar. (iii) The learned First Additional District judge, Indore, passed an order on March 6, 1974, that after taking into consideration the facts brought on record, the transfer of the remainderman's interest of the two minors to the educational trust was not only reasonable and proper but was also necessary for the benefit and protection of the minors and their assets. The learned Additional District Judge, therefore, granted permission to Smt. Usha Devi and her husband to transfer the remainderman's interest of the minors in the said private trust to an educational trust. (iv) In the meanwhile, by a deed of trust dated December I 8, 1973, Smt. Usha Devi created Devi Ahilyabai Holkar Educational Trust, hereinafter referred to as "the educational trust", by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest to the Educational Trust, the transfer was void, by virtue of the provisions of s. 6(a) of the Transfer of Property Act. The CIT (Appeals), therefore, held that the corpus of the trust property continued to vest in the assessee and consequently, the assessee was assessable only in respect of capital gains. (viii) Aggrieved by the order passed by the CIT (Appeals), the assessee as well as the Department preferred appeals before the Tribunal. The Tribunal held that under s. 58 of the Indian Trusts Act, 1882, when property was transferred or bequeathed for the benefit of married woman, she had no power to deprive herself of her beneficial interest. The Tribunal further held that the provisions of s. 8 of the Indian Trusts Act were also attracted which debarred Smt. Usha De I vi from transferring her interest. The Tribunal further observed that the provisions of s. 9 of the Indian Trusts Act did not permit a beneficiary to renounce her interest after having enjoyed the same for a decade. The Tribunal thus held that the CIT (Appeals) was not justified in holding that the rights and interest of Smt. Usha Devi in the assessee-trust were validly transferred on 18th December, 1973, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust. In reply, Shri Mukati, the learned counsel for the Department, contended that the provisions of ss. 8 and 9 and the proviso to s. 58 of the Indian Trusts Act were attracted, that there was no valid transfer, either of the income or of the corpus of the trust property and hence the Tribunal was justified in the view it took, on the facts and circumstances of the case. Having given our anxious consideration to the contentions advanced on behalf of the parties, we now proceed to answer the question referred by the Tribunal to this court. Question No. (1) : Section 58 of the Indian Trusts Act reads as under : " 58. The beneficiary, if competent to contract, may transfer his interest, but subject to the law for the time being in force as to the circumstances and extent in and to which he may dispose of such interest : Provided that when property is transferred or bequeathed for the benefit of a married woman, so that she shall not have power to deprive herself of her beneficial interest, nothing in this section shall authorise her to transfer such interest during her marriage." From a perusal of the aforesaid provision, it is clear that the proviso is attracted whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision is attracted only in the case of a bare or naked possibility and not in the case of possibility coupled with an interest such as that of a remainderman. The interest of remainderman in the instant case could, however, be validly transferred only after obtaining permission from the court under s. 8 of the Hindu Minority Guardianship Act, 1956, as the remainder men were minors at the material time. The requisite permission was accordingly obtained by the guardians of the minor remaindermen from the District Court, Indore. The ITO had no jurisdiction to decide as to whether the District Judge should or should not have granted such permission. The remaindermen's interest in the trust property was thus validly transferred by the deed dated 30th March, 1974. In view of these two deeds dated December 18, 1973, and 30th March, 1974, it must be held that the beneficial interest in the trust property of the assessee trust was validly transferred to the educational trust and in these circumstances, the fulfilment of the purpose of the assessee-trust, which was to pay the net residue of the rents, profits, interest and other income of the trust property to Smt. Usha Devi during her l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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