TaxTMI 
TaxTMI 
1940 (8) TMI 33
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....ors and trustees of his will and codicil. The fourth appellant is the son of the testator by his second wife, who predeceased him. The Chrome Leather Company had a leather business which was carried on some 12 miles from Madras, and the testator invested a large amount of capital in it. The balance sheet as at the 31st March, 1920 (which for the purposes of this case has been accepted as being correct) showed that the capital stood at Rs. 16,75,892-11-10. Nearly the whole of this amount, however, represented the value of buildings, land, plant, machinery and stock-in-trade. The cash in hand was in fact only Rs. 538-15-2. In the years 1917 and 1919 the testator caused certain entries to be made in the books of the Chrome Leather Company crediting the testatrix, their son (the respondent) and their two daughters, Phyllis Dora Chambers (now Mrs. P. Michell) and Shaila Florence Chambers with certain sums which were debited to his capital account. Separate accounts in the names of the testatrix, the respondent, and the two daughters were opened in the books and in these accounts the credits were entered. 2. On the 25th July, 191 9, the testator wrote to the Chrome. Leather Company in....
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....f his family with these amounts appears from a letter which he wrote at a later date. The object was to ensure that his relations benefited as the result of his life's work and to prevent the Government of India 'grabbing' death duties on the whole of his estate. 5. On the 27th September, 1919, the testator instructed the Chrome Leather Company to place a further sum of Rs. 1,00,000, to the credit of the testatrix. This sum was re-transferred to the testator's capital account on the 3rd March, 1924, as the result of a letter which the testatrix wrote to the Company, no doubt written at the behest of the testator. The testatrix was then in the south of France. She sailed with the testator fort India shortly afterwards but died at Colombo. Before she died the testatrix was paid in the aggregate the sum of Rs. 83,606-3-6 as interest on the sums standing to her credit in the books of the Chrome Leather Company. 6. By her will the testatrix bequeathed to her trustees the Rs. 2,00,000 standing to her credit after the re-transfer of Rs. 1,00,000, upon trust for the benefit of her son, her two daughters and their issue. For some months after her death interest on the ....
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.... do not wish to withdraw from any undertakings I have made or promises I have given but I am certainly determined not to permit if I can prevent it any doubt to exist as to the position of my affairs when my time comes. 8. The same attitude was taken up by the testator in a letter dated 12th November, 1932, addressed to Messrs. Fraser and Ross, the firm's auditors. The certificate which they had then given did not meet with his approval as the qualifications had not been removed. In his letter to the auditors he said: Certain transfers from my capital in our books were made of my own free-will and I have no intention of cancelling same, but I have never received any 'loans', and there was never any consideration either given or accepted and as regards payment of interest I am under no obligation to any one. 9. Some days later the Rs. 2,00,000 was re-transferred to the capital account of the testator. This was, of course, done in assertion of his contention that he was under no legal oblation in respect of the allocations of capital to his relations and to avoid the auditors qualifying their certificate. When the respondent came to know of this he protested as a....
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.... of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust. 12. These observations were not in complete accord with what had been said in certain earlier cases, but they have since been accepted as correctly stating the law. In that case one Thomas Medley executed a voluntary deed purporting to assign certain of his shares in a bank to one Samuel Lord to be held by him upon certain trusts for the benefit of the plaintiffs. The shares were transferable only by entry in the books of the bank; but no such transfer was ever made. Lord held a general power of attorney authorising him to transfer Medley's shares and after the execution of the settlement, Medley gave him a further power of attorney which authorised him to receive the dividends on the shares. Lord received the dividends for three years, but Medley died without the formalities required for the transfer of the shares having been completed. It was held that as it was not the intention of the settlor to constitute himself a trustee of the shares, but to vest the trust in Lord there was no valid trust of the shares created in the settlor. It was further held that no val....
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....less the trust is declared by will or the author of the trust is himself to be the trustee. Milroy v. Lord1 was followed by the Bombay High Court in Manchershaw v. Ardeshir (1908)10BOMLR1209 , Richards v. Delbridge (1874) 18 Eq. 11 and Heartley v. Nicholson (1874) 19 Eq. 233 were there referred to with approval. Sargent, C.J., applied Richards v. Delbridge (1874) 18 Eq. 11 and Heartley v. Nicholson (1874) Eq. 233, in Ashabai v. Haji Tyab Haji Rahimtulla I.L.R.(1882)Bom.115, where it was held that the fact that the father opened an account in his books in the name of his son to which money was credited did not raise a presumption that the father intended to create a trust in favour of his son of the sums appearing in the account; The Court's attention has also been drawn to Bai Mahakore v. Bai Mangla I.L.R.(1911)Bom. 403, where Chandavarkar and Heaton, JJ., differed as to whether there was a trust or a gift, but I do not consider it necessary to pause to examine this case as the facts are in no way analogous to the facts in the present case. 16. What is manifest in this case is that the testator was not in a position to make gifts in cash of the amounts standing to the credit....