TaxTMI 
TaxTMI 
1942 (2) TMI 16
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....d immovable property worth ₹ 1,10,000. Mr. Naidu constituted himself the managing trustee of the trust and gave himself full power to deal with its assets. This reference arises out of a claim made under Section 4(3)(i) of the Indian Income-tax Act by Mr. Naidu, as the managing trustee, for a refund of the tax paid in respect of dividends declared on the shares held in these transport companies, The Income-tax autorities refused to allow a refund. Their reason was that the shares were not held under trust wholly for charitable purposes within the meaning of the section. The managing trustee having asked the Commissioner of Income-tax to state a case to this Court under Section 66(2) of the Income-tax Act, the Commissioner has referred....
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....g immediately and that the companies in which Mr. Naidu was interested were to have the benefit of these assets set apart by him. Clause 54 of the deed provides that so long as Mr. Naidu holds the office of managing trustee he shall have the power to borrow to any extent on the properties conveyed to the trust and that the board of trustees shall be able to borrow moneys which are necessary to discharge debts contracted by Mr. Naidu. The power given to him is not limited to borrowing for the purpose of the trust. Apparently he can borrow moneys for his own purposes on the security of the assets set apart by him. By clause 55 the trustees are empowered, so long as Mr. Naidu holds the office of managing trustee, to sell immoveable properties ....