Minor trust income attribution and multi-beneficiary trust receipts were confined to trust treatment, not personal income.

Income from a trust for a minor child was not attributable to the settlor under section 16(3)(b) of the Indian Income-tax Act, 1922 where the child had no present right, no beneficial interest, and no income for the relevant accounting year; the anti-avoidance provision was read to tax only income that accrued to or benefited the minor in that year. Income received under an earlier trust deed for the maintenance of a person, his wife and children was treated as trust income, not the recipient's personal income, because the deed created a binding trust with multiple beneficiaries and indeterminate shares; assessment had to proceed under the trustee machinery. The later language of section 64(v) of the 1961 Act was not treated as declaratory of the earlier law.

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Issues: (i) Whether income from a trust created for a minor child, where the child had no present right or beneficial interest in the income during the relevant accounting year, was includible in the settlor's total income under section 16(3)(b) of the Indian Income-tax Act, 1922. (ii) Whether income received by the assessee under an earlier trust deed, payable for the maintenance of himself, his wife and children, was includible in his total income as his own income or was assessable only in the character of trust income under section 41 of the Indian Income-tax Act, 1922.

Issue (i): Whether income from a trust created for a minor child, where the child had no present right or beneficial interest in the income during the relevant accounting year, was includible in the settlor's total income under section 16(3)(b) of the Indian Income-tax Act, 1922.

Analysis: The trust deed required the income to be accumulated during the child's minority and added to corpus, with only the future income of the enlarged fund becoming payable after majority. In the relevant accounting year the minor derived no benefit, had no right to receive the income, and had no beneficial interest in it. Section 16(3)(b) was construed in the setting of section 16 as a whole and as part of an anti-avoidance scheme aimed at taxing only income which, in the relevant year, accrued to or benefited the wife or minor child. The later language of section 64(v) of the Income-tax Act, 1961 was not treated as declaratory of the earlier law.

Conclusion: The income was not includible in the assessee's total income; the answer was in favour of the assessee.

Issue (ii): Whether income received by the assessee under an earlier trust deed, payable for the maintenance of himself, his wife and children, was includible in his total income as his own income or was assessable only in the character of trust income under section 41 of the Indian Income-tax Act, 1922.

Analysis: The direction in the trust deed was held to create a binding trust in favour of the assessee, his wife and children, and not a mere expression of hope or desire. The assessee was therefore a trustee receiving income for multiple beneficiaries, not the sole beneficiary. Since the beneficiaries' shares were indeterminate, the department could proceed only under the machinery applicable to trustees and could not treat the amount as the assessee's personal income for the purpose of super-tax.

Conclusion: The amount was not includible in the assessee's total income as his own income; the answer was in favour of the assessee.

Final Conclusion: The statutory provisions governing family settlements and trust income were construed to require a present benefit in the relevant year for minor-child attribution, and income received under a genuine multi-beneficiary trust could not be assessed as the recipient's personal income merely because he was one of the trustees.

Ratio Decidendi: For attribution under section 16(3)(b), the minor child must derive a present benefit in the relevant accounting year, and income received under a trust for multiple beneficiaries cannot be treated as the personal income of one trustee-beneficiary where the receipt is impressed with a binding trust and the beneficiaries' shares are indeterminate.

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