9911796707
TMI Blog1992 (6) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/9th of the income from this house property. The assessee had also executed four supplementary Trust Deeds on 26-6-1979 for the purpose of clarifying and removing the difficulties faced by the trustees in administering the Trust. As a result of these supplementary Trust Deeds, the Trust for the benefit of charitable and religious purposes was merged into Devseva Trust for the benefit of the family deity of the assessee and, consequently, the shares of the beneficiaries became 1/8th each. Since the supplementary Trust Deeds were executed and registered on 26-6-1979, they are not material for the purpose of the present appeals except for a proper understanding of the contentions of the Revenue and the assessee's counsel, as they were referred to in the course of the arguments. But we are actually concerned only with the five Trust Deeds executed in the year 1969. 3. The Assessing Officer held that the original Trust Deeds executed by the assessee in 1969 were revocable transfers within the meaning of section 63 of the Income-tax Act, 1961. In the assessment years 1971-72 and 1972-73, the ITO held that the entire income from this property would consequently be assessable in the ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee took up the matter in appeal for this year, the AAC set aside the assessment by his order dated 12-1-1984 with a direction to the ITO to make a fresh assessment in accordance with the directions given by him. As per these directions of the AAC the whole of the income from the trust property was held to be assessable in the hands of the assessee under section 61 of the Act. The assessee came up on further appeal to the Tribunal against this order of the AAC objecting to the same, on the ground that it resulted in an enhancement of her income, for which the AAC had not given any notice nor opportunity to the assessee by issuing a notice under section 251(2) of the Act. The Appellate Tribunal 'A' Bench, Calcutta in ITA No. 652 (Cal.)/1984 accepted these contentions of the assessee by their order dated 25-3-1986 and set aside the order of the AAC and restored the matter to his file with a direction that he shall hear and decide the appeal afresh after giving an opportunity of being heard to the assessee as well as the ITO and also after complying with the provisions of section 251(2) of the Act. Pursuant to this order of the Appellate Tribunal, the Dy. Commissioner(Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the trust property had been assessed in the hands of the assessee as belonging to her. The total income so assessed amounted to Rs. 37,433. 9. The appeals filed by the assessee for the assessment years 1971-72 and 1972-73 were disposed of by a common order dated 12-3-1990 by the Dy. Commissioner(Appeals). There he followed his order dated 15-2-1990 for the assessment year 1977-78, referred to in paragraph 5 above and held that the transfer to the Trust of the property by the assessee was not a revocable transfer and that only the beneficial interest of the three minor sons in both the years should be taxed in her hands under section 64 of the Act. 10. The appeals for the assessment years 1973-74 to 1976-77 and 1978-79 were also disposed of by a common order dated 13-3-1990 wherein the Dy. Commissioner(Appeals) following the same line of reasoning held that the Trust created by the assessee was not a revocable transfer. He, however, upheld the inclusion of the beneficial interest of the minor sons only in the respective years. 11. The appeals for the two years 1977-78 and 1979-80 were disposed of by a separate order dated 12-3-1990, wherein the Dy. Commssioner(Appeals) foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly covered by the decision of the Calcutta High Court in the case of Mrs. Leela Nath v. CIT [1982] 134 ITR 507 at pages 516 517. He, therefore, argued that the orders of the Dy. Commissioner(Appeals) were correct and that the same should be upheld. 14. I have carefully examined the contentions urged on both sides in the light of the terms of the Trust Deeds, copies of which have been filed by the assessee's learned counsel and the authorities referred to above. 15. In the present case, the learned counsel on both sides were agreed that the main order where the entire issue has been considered in great detail by the Dy. Commissioner(Appeals), is in ITA No. 1725 (Cal.) of 1990 for the assessment year 1977-78. A perusal of this order shows that the Dy. Commissioner had considered the provisions of the original Trust Deeds executed by the assessee in 1969 as also of the supplementary Trust Deeds of 1979 and came to the conclusion that nowhere it was found that the transferor Smt. Padmabati Chatterjee reassumed power directly or indirectly over the whole or any part of the income or assets settled upon the Trust. The Dy. Commssioner held that the assessee was simply acting as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, confine myself only to the Trust Deed dated 4-6-1969 which is the only Deed relevant for our purpose. A perusal of this Trust Deed shows that the settlor had settled 1/5th share of the plot of land along with 1/5th share in the masonry structures built thereon as shown in the plan annexed to the document and marked as Lot '4', the fair market value of which amounted to Rs. 50,000, on trust for Devseva. The four trustees are the four major sons of the assessee. The name of this Trust is also Padmabati Trust. Clause 2 of the Trust Deed vests the trust properties in the trustees. I quote below clause 3 which is relevant for the purpose of this appeal for a correct and proper understanding of the controversy in the present appeals :- " 3. During the life time of the said Settlor Smt. Padmabati Chatterjee the income arising from the trust property shall be proportionately distributed amongst the various beneficiaries of the trust and also spent in Devseva and in other charitable purposes as embodied in this deed of trust by the trustees UPON TRUST as follows : (a) To pay out, of the income of the Trust property all Corporation taxes, any other property tax or taxes incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in the settlor. Clause 3 does not contain any provision for the retransfer directly or indirectly of the whole of any part of the income or assets to the settlor nor does it give any right to the settlor to assume power directly or indirectly over the whole or any part of the income or assets. On the contrary, a fair reading of this clause fully supports the conclusion of the Dy. Commissioner(Appeals) that both the asset and the income therefrom entirely belong only to Devseva Trust and not to the assessee at all. As rightly held by the Dy. Commssioner, since the family deity for whose benefit this Trust has been created by the assessee, has to be represented by same person, the assessee as the mother and eldest member of the family has been entrusted with the obligation and duty of performing the puja to the family deity during her life time. It would be more appropriate to say that she had taken upon herself this legal obligation and duty. It is nowhere the intention of the settlor to take this 1/9th or 1/8th share of income from the property for her own benefit and enjoyment and not for the purpose of the Devseva to the family deity. The construction sought to be placed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing any right to reassume power would not make it revocable and that if the trustees acting in derogation or in breach of the transfer and the benefit is derived thereby by the settlor, it cannot be said that the Deed of Transfer was revocable, in my view, this decision of the Calcutta High Court is directly applicable to the facts of the present case and the Dy. Commissioner(Appeals) rightly followed this decision to hold that this is not a revocable transfer by the assessee. There is no warrant for holding that these Trust Deeds executed by the assessee contain any provision or give her any right to reassume either directly or indirectly power over the assets or the income of the property for her own benefit. Such an intention on the part of the assessee, is totally absent, as could be seen from the terms of the Trust Deeds, I, therefore, respectively follow the decisions of the Supreme Court and the Calcutta High Court, referred to above, and confirm the orders of the Dy. Commissioner(Appeals) holding that the Trust Deeds in question are not revocable transfers and that, therefore, the income from this property settled on trust is not assessable in the hands of the assessee, ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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