Deferred benefit to minor children under trust is outside section 64(v) when the interest is contingent after majority.

Income arising under trusts for minor children was analysed under section 64(v) by construing the phrase "for the immediate or deferred benefit" in light of the provision's anti-avoidance purpose and legislative history. The text explains that the section targets transfers intended to secure benefits for minors during minority, including benefits postponed within that period, but it does not extend to a contingent benefit that arises only after majority. Where the trust deed provides for accumulation during minority and the child has no present vested right in the income, the interest is contingent rather than vested, and the income is outside section 64(v).

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Issues: Whether income arising to trustees under trusts created by the assessee for his minor daughters, and accumulated during minority to be added to corpus and enjoyed after majority, was includible in the assessee's total income under section 64(v) of the Income-tax Act, 1961.

Analysis: The expression "for the immediate or deferred benefit" in section 64(v) was construed in the light of the statutory object, the legislative history, and the mischief sought to be remedied. The provision was intended to prevent avoidance of tax by transfers to trustees for the benefit of minor children, but the added words "immediate or deferred" were held to address the situation where benefit is postponed beyond the year of account, not to extend the section to benefits deferred beyond the period of minority. The trusts directed accumulation of income during minority, with enjoyment only after majority, and the minor daughters had no present vested right to the income during the relevant period. Applying the principles under the Transfer of Property Act and the Indian Succession Act, the interest created under the trust deeds was held to be contingent rather than vested, and a contingent future benefit after majority did not satisfy section 64(v).

Conclusion: The income was not includible in the assessee's total income under section 64(v), and the answer was in the negative.

Final Conclusion: Income arising under a trust for minor daughters, where the benefit is accumulated during minority and becomes available only after majority, does not fall within section 64(v) when the interest created is contingent and not vested.

Ratio Decidendi: Section 64(v) applies only where the income from transferred assets is for the immediate or deferred benefit of a minor child during minority, and it does not extend to a contingent benefit postponed beyond minority.

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