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TMI Blog1981 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... in law ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not including the value of 300 shares of the assessee in M/s. Indra Singh Sons Pvt. Ltd. transferred in favour of Sardar Baldev Singh Charitable Trust in the assessee's wealth for the assessment year 1959-60 ? " In order to appreciate the questions it will be necessary to refer to certain facts. The assessment year involved is 1959-60, with its date of valuation being 31st March, 1959. The assessee, Sardar Surjit Singh, had 850 shares in M/s. Indra Singh Sons Pvt. Ltd. He transferred 50 shares to Smt. Baljit Kaur by a deed executed on the 10th January, 1959, and 300 shares to Sardar Baldev Singh Charitable Trust on the 27th February, 1959. By means of a letter dated 20th January, 1959, the assessee wrote to the trustees of the trust that as discussed with them about his decision to set up a public charitable trust and/or a public religious trust and in view of their kind acceptance of the office of trustees to the trust, he was anxious to execute the transfer of sufficient amount of security to the trust and offered " immediate transfer to you and delivery of possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid 300 shares together with the corresponding certificates of the 300 shares to the Trustees, namely, the 10 day of February, 1959, expiring on or about the 9th day of February, 1969, and the Truster shall have a right to revoke the transfer and settlement of any part or all the said 300 shares to the Trustees hereto provided always that the right of revocation and recall shall hereto be exercised by the Truster before the expiry of the last mentioned year of the said period of 10 years by serving full clear 6 months notice expiring with the last day of the said period of 10 years on the Trustees as then may be functioning as such and unless it is so done, this Trust shall continue the transfer and settlement of the said 300 shares to this trust for the purpose of this Trust shall continue and the entirety of the Trust Fund as may be then have been built up with the yields or produce or income, profits or gains earned from time to time by and of and/or with the help of the said 300 shares shall continue to merge in the Trust Fund, vest in the Trustees and to be utilised only and solely for the purpose of this Trust. In the event of the Truster recalling any part and/or all the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax and other taxes but that also was not allowed by the WTO. The assessee appealed to the AAC against these assessments. The AAC decided the two appeals by a consolidated order. For the assessment year 1959-60, he agreed with the WTO and held that the Trust actually took effect from the 8th July, 1959, and, hence, the value of the 300 shares was rightly included in the assessment of the assessee as forming part of his assets. But for the year 1960-61, he took a different view and held that the transfer of these shares had been effected by an irrevocable transfer and, hence, the value of the said shares had to be excluded from the computation of the net wealth. As regards the valuation of these shares, following the decision of the Calcutta Bench 'A' of the Appellate Tribunal in the case of Mrs. Prakash Kaur v. WTO, where the value per share for the assessment year 1959-60 was worked out at Rs. 3,416 and for the year 1960-61, at Rs. 3,391, the AAC directed the WTO to value the shares of the assessee accordingly. As regards the liability for income-tax and other taxes for each of these years, the AAC merely observed that the first ground had not been elaborated and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Law, para. 407, at p. 438, of the said edition, where the learned editor has stated that a Hindu who wished to establish a religious or charitable institution, might, according to law, express his purpose and endowment. A trust deed was not required for that purpose. -In this connection, reference may be made to the Hindu Law of Religious and Charitable Trusts, 2nd edn. at p. 90 by Dr. B. K. Mukherjee, which was as follows "No express words of gift either directly or indirectly in the shape of a trust are required to create a valid dedication; all that is necessary is that the religious purpose or object of the donor shall be clearly specified and that the property intended for endowment should be set apart and dedicated to those purposes." Therefore, the essentials for making a charitable endowment by Hindu were that he should express his purpose either directly or indirectly to create a dedication clearly. Secondly, he should set apart the intended property for the endowment and, lastly, lie should dedicate the property to such purpose or object. In other words, he should divest himself of all right and title in that property. In this connection, reference may be made to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets if such instrument (i) contains any provision for the re-transfer, directly or indirectly, of the whole or any part of the assets or income therefrom to the transferor, or (ii) in any way gives the transferor a right to re-assume power, directly or indirectly, over the whole or any part of the assets or income therefrom." The conditions were set out in cls. (19) and (20) of the declaration of trust. It was not revocable and no question of retransfer-directly or indirectly of the whole or any part of the assets or income or it did not give to the transferor any right to reassume power directly or indirectly over the whole or any part of the assets or income therefrom as contemplated under the aforesaid clause of the section. The power that was reserved was only with respect to the corpus and that was not until after the expiry of ten years from the date of declaration of the trust. The trust, therefore, was an irrevocable trust within the meaning of Expln. (b) to s. 4 of the W.T. Act, 1957. The Tribunal has so held and we are in agreement with the said view of the Tribunal. It also appears that the Tribunal has referred to a decision of the Calcutta High Court. The Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to say, the valuation of the shares in respect of 800 shares, only 500 shares were to be included in the assets of the assessee for the two years under appeal. The WTO determined the value of these shares at the rate of Rs. 4,236 per share while the AAC, relying on the decision of the Tribunal in some other matter, took the value at Rs. 3,418 for 1959-60 and Rs. 3,391 for 1960-61. The CWT induced the Tribunal to the further question of valuation to the High Court at Calcutta and to the reference decided on the 117th August, 1967. It was agreed before the Tribunal by both the sides that after this decision the value of the shares should be taken at Rs. 3,618 for 1959-60 and Rs. 3,741 for 1960-61 per share. The Tribunal, after considering these aspects, directed the WTO to adopt the break-up value method subject to an allowance of 15% therefrom in the light of the observations made by the order of the Tribunal. So far as the question of tax liabilities are concerned the ground related only to 1959-60 and the liabilities for income-tax and other taxes as Claimed by the assessee were a " debt owed " within the meaning of s. 2(m) of the W.T. Act on the valuation date and as such ded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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