Trust cross-transfers do not trigger clubbing under section 16(3)(a)(iv) where income is not from assets transferred by the assessee.

Section 16(3)(a)(iv) of the Indian Income-tax Act, 1922 was held inapplicable to assets placed in trusts created concurrently by related settlors for the benefit of minors. The court followed its earlier Division Bench view that income must arise from assets transferred by the assessee himself, so cross-transfers through separate trusts do not attract section 16(3)(b) and do not amount to an indirect transfer to the assessee's children; the revenue's general anti-avoidance arguments could not displace that binding precedent.

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Issues: Whether section 16(3)(a)(iv) of the Indian Income-tax Act, 1922 applied to assets transferred through trusts created concurrently by related settlors, and whether such concurrent trust settlements constituted an indirect transfer of assets to the assessee's children for the purposes of that provision.

Analysis: The binding prior decision of the same court held that where assets are transferred to trustees for the benefit of minors, section 16(3)(a)(iv) does not apply, and that section 16(3)(b) also does not assist the revenue in cases of cross-transfers through trusts because the income must arise from assets transferred by the assessee himself. The court also found no basis to disregard that precedent, and the general anti-avoidance observations relied on by the revenue did not displace the specific ratio of the earlier Division Bench decision. Since the questions referred were confined to the applicability of section 16(3)(a)(iv), both had to be answered in accordance with that binding view.

Conclusion: Section 16(3)(a)(iv) was not applicable to the concurrent trust settlements, and the arrangement did not amount to an indirect transfer attracting inclusion of the income in the assessee's assessment.

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