TaxTMI 
TaxTMI 
1983 (8) TMI 12
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.... in favour of his wife, six daughters and his son-in-law called Chandra Mohan settling 1/9th undivided share in the business of " Cheluva and Co., on each of them. " On March 15,1961, the assessee constituted a partnership firm comprising of himself, his wife and six daughters as partners. The last two partners being minor daughters were admitted to the benefits of partner ship. The capital contribution by each one of the partners consisted of the undivided share in the business of Cheluva & Co., which they got under the settlement deed dated August 12, 1960. Clause 6 of the settlement deed provides as follows : "The settlor hereby gives to the 8th donee one-ninth share in the schedule business in consideration of his undertaking to manage it. In the event of his ceasing to so manage the business, from that date, the settlor and the other donees are to take his one-ninth share and make the necessary arrangements for the efficient management of the schedule business. If the 8th donee manages the business for a period of ten years from this date without interruption, he will be fully entitled to the one-ninth share and profits without any obligation thereafter to manage the bus....
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....ly applied by the ITO. Section 60 provides: "All income arising to any person by virtue of a transfer whether revocable or not and whether effected before or after the commencement of this Act shall, where there is no transfer of the assets from which the income arises, be chargeable to income-tax as the income of the transferor and shall be included in his total income." Section 61 makes all income arising to any person by virtue of a revocable transfer of assets chargeable to income-tax as the income of the transferor. Section 62 stipulates that the provisions of s. 61, that is to say, addition of income by virtue of a revocable transfer of assets to the income of the transferor, should not apply to income arising to any person by virtue of a transfer by way of, inter alia, a transfer which is not revocable during the lifetime of the beneficiary or made before April 1, 1961, which is not revocable for a period exceeding six years. But sub-s. (1) of s. 62 is hedged by a proviso, which is applicable, provided that the transferor does not derive any direct or indirect benefit from such income in either case. If the transferor does derive, in fact, direct or indirect benefit....
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....16(1)(c) if the revocability relates only to a part of the income. (see Commissioner of Income-tax v. Jitendranath Mallick [1963] 50 ITR 313 (Cal)). We are in entire agreement with the above view of the Calcutta High Court and consider that the same is supported by the decision of this court in Rami Bhuwaneshwari Kuer's case [1964] 53 ITR 195 (SC). We may also refer to the significant change made in the language with regard to revocable transfers in the Income-tax Act, 1961. Section 63 of that Act provides: For the purposes of sections 60, 61 and 62 and of this section (a) a transfer shall be deemed to be revocable if (i) it contains any provision for the retransfer directly or indirectly of the whole or any part of the income or assets to the transferor, or (ii) it, in any way, gives the transferor a right to reassume power directly or indirectly over the whole or any part of the income or assets; .......' It can well be said that the necessity for expressly mentioning 'part of the income' was felt because, under the provisions of the Act, part of the income was not covered." It is clear from the above observations of the Supreme Court that in view of the significan....
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....nder the deed of partnership are required to be divided according to the share to which the partners are entitled to under the deed of settlement. The partnership deed is, therefore, not a relevant document for the purpose of determining whether the deed of settlement is a revocable one or not. Mr. Sarangan, counsel for the assessee, however, urged that the revocable transfer is confined only to the share of Chandra Mohan and, therefore, his share amount alone shall be included in the total income of the assessee and not the income to which the other sharers are entitled to. We do not think that this contention could be accepted unless we agree with the learned counsel that the deed of settlement contained nine independent transfers. If we peruse the deed, it is impossible to subscribe to the contention of the learned counsel that the deed contains nine independent transfers. The settlor decided to settle on each of the donees an undivided 1/9th share in the schedule business retaining for himself an undivided 1/9th share therein. The transfer, therefore, was one and indivisible and it shall be regarded as a revocable transfer. Mr. Sarangan next contended that the term as to ....