Deferred trust income and contingent beneficiary interests were not taxable in the assessee's hands for the relevant year.

Trust income deferred until a minor beneficiary attains majority does not accrue during the relevant assessment year and cannot be included in the father's income-tax assessment. The same principle was applied to the wealth-tax issue: the Revenue could not, for the first time in reference, argue that the beneficiary's contingent interest was itself a separately taxable asset, especially where that point had not been raised before the Tribunal and would require fresh factual inquiry on valuation and incidence. On both issues, the tax treatment was resolved in favour of the assessee and against the Revenue.

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Issues: (i) Whether the trust income was includible in the assessee-father's income-tax assessment for the assessment year 1977-78 when the beneficiary was a minor and the trust directed accumulation until majority; (ii) Whether the value of the trust property could be included in the assessee's net wealth under the Wealth-tax Act, and whether the Revenue could raise for the first time in reference the contention that the beneficiary's contingent interest was itself a taxable asset.

Issue (i): Whether the trust income was includible in the assessee-father's income-tax assessment for the assessment year 1977-78 when the beneficiary was a minor and the trust directed accumulation until majority.

Analysis: The trust income was held to be deferred until the beneficiary attained majority, and earlier decisions in the assessee's own case had already held that such income did not accrue during the relevant assessment year. On that footing, the minor beneficiary had no accrued income capable of inclusion in the hands of the assessee-father for that year.

Conclusion: The question was answered in the affirmative against the Revenue and in favour of the assessee.

Issue (ii): Whether the value of the trust property could be included in the assessee's net wealth under the Wealth-tax Act, and whether the Revenue could raise for the first time in reference the contention that the beneficiary's contingent interest was itself a taxable asset.

Analysis: The only issue raised before the Tribunal was whether the beneficiary's interest was absolute or contingent, and no ground or argument was advanced there that a contingent interest, as such, was a separately assessable asset requiring valuation. A question not raised or considered by the Tribunal does not arise from its order, and the proposed inclusion would also require fresh factual investigation as to valuation and incidence. The finding that no includible asset existed in the relevant wealth assessment was therefore left undisturbed.

Conclusion: The question was answered against the Revenue and in favour of the assessee.

Final Conclusion: Both references were resolved against the Revenue, and the trust income as well as the disputed wealth inclusion were held not taxable in the assessee's hands for the relevant year.

Ratio Decidendi: Income that is deferred by the terms of a trust and does not accrue to the beneficiary during the relevant year cannot be assessed in the hands of the guardian, and a new point requiring fresh factual inquiry cannot be raised for the first time in reference if it was neither urged before nor decided by the Tribunal.

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