1994 (8) TMI 9

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....2 being the dividend in respect of the share dealt with by the assessee under the settlement deed dated March 26, 1974, included under section 64(1)(v) of the Income-tax Act, 1961? In the assessment year under consideration, the assessee had transferred 3,200 shares in Messrs. Rane Brake Linings Limited to a discretionary trust created on March 27, 1974, for the benefit of his minor son, T. G. K. Raman. Relying upon section 64(1)(v) of the Income-tax Act, 1961, the Income-tax Officer included the income arising out of the shares in the hands of the assessee for the assessment year under consideration. On appeal, following his earlier order, the Appellate Assistant Commissioner directed the Income-tax Officer to exclude the dividend incom....

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.... of the Act have no application at all. Therefore, according to learned counsel for the assessee, even according to the trust deed, the income from the trust was to go to the son only after his attaining majority. It was, therefore, pleaded that the trust was created not for the benefit of the minor, but for the benefit of the major, even though during the relevant point of time, he was a minor. Hence, it was submitted that the Tribunal was correct in deleting the dividend income instead of including the same in the hands of his father under section 64(1)(v) of the Act. We have heard the rival submissions. Clause 6 of the trust deed states as under : "Nothing in this indenture shall be deemed or construed to confer any right on the be....

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....efrom has to be given to the child after attaining majority. This was the view taken by the Bombay, Gujarat, Andhra Pradesh and Karnataka High Courts in the decisions Yogindraprasad N. Mafatlal v. CIT [1977] 109 ITR 602 ; Addl. CIT v. M. K. Doshi [1980] 122 ITR 499 ; CIT v. (T.) Ponnaiah [1988] 172 ITR 269 and CIT v. M. D. Veeranarasimhaiah [1988] 174 ITR 435, respectively. The Tribunal in its decision followed the judgment of the Supreme Court in the case of CIT v. Manilal Dhanji [1962] 44 ITR 876 wherein it was held that clause (vii) of section 64(1) of the Act would not apply if the income during the minority is to be accumulated and added to the corpus and the increased corpus or the income therefrom is to be given to the child after at....