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TMI Blog1954 (4) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... as the individual income of the respondent Ratilal becomes the joint family income by a process of successive application of the fictions enacted in the last portion of clause (c) of Section 16(1), and the two provisos thereto, cannot be accepted. This is enough, to dispose of the appeal. Appeal dismissed. - - - - - Dated:- 5-4-1954 - Judge(s) : JAGANNADHADAS., N. H. BHAGWATI., S. R. DAS JUDGMENT The Judgment of the Court was delivered by JAGANNADHADAS, J.---This is an appeal under Section 66A of the Indian Income-tax Act from the judgment of the High Court of Bombay given on a reference to it by the Income-tax Appellate Tribunal under Section 66 of the Act. The proceedings relate to the four assessment years, 1942-43, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 16 of the Indian Income-tax Act was modified in 1939 and clause (c) of sub-section (1) thereof as amended is as follows : " In computing the total income of an assessee---- ..................................................................................... all income arising to any person by virtue of a settlement or disposition whether revocable or not, and whether effected before or after the commencement of the Indian Income-tax (Amendment) Act, 1939 (VII of 1939), from assets remaining the property of the settlor or disponer, shall be deemed to be income of the settlor or disponer, and all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be income of the transferor: Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidual income and that Section 16(1)(c) had no application to him. The Income-tax authorities overruled this contention. The assessee appealed to the Income-tax Appellate Tribunal but by order dated the 16th March, 1950, it confirmed the view taken by the Income-tax authorities. Thereupon at the instance of the respondent, the Tribunal stated a case to the High Court of Bombay under Section 66(1) of the Act and referred the following question for its decision : " Whether in the circumstances of the case and on the true construction of the settlement deed, is the income from the trust property liable to be included in the income of the assessee Hindu undivided family ? " The contention of the assessee before the High Court was two-fold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me which Ratilal receives after the death of Ramjibhai is received by him not on behalf of the joint family but in his own individual capacity. Ratilal alienated the property in one capacity and he receives the benefit under the trust deed in an altogether different capacity. Therefore it cannot be stated that this trust deed in any way benefits the joint family. " The learned Attorney-General for the Income-tax Commissioner, while not seriously disputing that on a mere construction of the trust deed the income in the hands of Ratilal was intended to be his individual income, contends that the learned Judges erred in importing any question of capacity in which the income is held by Ratilal, into the application of Section 16(1)(c). He pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, at the outset, the settlor was the Hindu undivided family and the trust deed was executed by both the persons as the sole surviving co-parceners representing the family, the second proviso which treats one out of a group of settlors as the "settlor" cannot come into operation because the Hindu undivided family is a unit independent of and larger than the two co-parceners and is not merely a collection of the individuals who acted on its behalf. Therefore, the provision in the settlement deed giving the income back to Ratilal, even if it be taken as a retransfer of the income, cannot be treated as such retransfer to the original settlor, viz., the Hindu undivided family. Hence the last portion of clause (c) of Section 16(1) does not come ..... X X X X Extracts X X X X X X X X Extracts X X X X
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