9911796707
TMI Blog1988 (5) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... t years 1981-82 and 1982-83. The point did not arise before the Inspecting Asstt. Commissioner while he was completing the assessments. However, the brief facts relevant for these appeals are that the assessee-company, as a settlor, created two irrevocable trusts on 11th September, 1979 and 12th November, 1979. The first trust was created for providing financial assistance to the employees of the settlor and their families and dependents for their education, medical facilities, sports, games, cultural and other activities and their welfare generally. The second trust was created for the financial assistance to be provided to the officers of the settlor and their families and dependents for their education, medical facilities, sports, games, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years were erroneous and prejudicial to the interests of the revenue. Accordingly, the CIT set aside the assessments and directed the IAC to make fresh assessments after considering the correct position of law and records. 4. The counsel for the assessee filed copies of the two trust deeds and referred to the provisions of section 63(a)(ii) of the Act and clause 3(b) of the trust deeds, and urged that the CIT did not assume jurisdiction under section 263 correctly since the Settlor did not reassume power on the income or assets of the trusts. Therefore, he indicated that dividends received by the trusts could not be included in the income of the Settlor. The departmental representative, on the other hand, relying on the decision of the Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trust Deed, but no such variation shall extend to vary or affect the definition of the objects of the said Trust as contained herein nor authorise the application of any part of the capital or income of the Trust Fund for any purpose other than the purposes specified herein." If the provisions of section 63(a)(ii) are carefully perused, it would be clear that application of this provision would only arise when the Settlor reassumes power directly or indirectly over the whole or any part of the income of assets. In other words, if the Settlor, directly or indirectly, has right to reassume power over whole or any part of the Income or assets of the trusts, the trusts could not be said to be irrevocable. A similar point came up for consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner or for a particular charitable object contemplated by the trust cannot be said to confer a right to reassume power within the first proviso. Otherwise a settlor could never name himself as a sole trustee. It seems to us that the latter part of the proviso contemplates a provision which would enable the settlor to take the income or assets outside the provisions of the trust deed. The Hon'ble High Court further considered the decision of the Supreme Court in the case of CIT v. S. Raghbir Singh [1965] 57 ITR 408. The view taken by the Hon'ble Calcutta High Court has been referred to the case of Mrs. Leela Nath v. CIT [1982] 134 ITR 507. 6. A perusal of clause 8(b), as quoted above, does not indicate, in any way, that the Settlor reassume ..... X X X X Extracts X X X X X X X X Extracts X X X X
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