TaxTMI 
TaxTMI 
1982 (9) TMI 8
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....ft of Rs. 32,500. In the original assessment of the assessee for the year 1970-71. the income accruing to the trust was not taken note of. After completion of the original assessment, the ITO reopened the assessments of the assessee under s. 147(b) of the I.T. Act, 1961, hereinafter referred to as the Act and included the proportionate share income of the trust as the income of the assessee on the ground that the trusts created by the assessee and his wife are invalid. On appeal by the assessee, the AAC held that the reopening of the assessments is based on a mere change of opinion and as such invalid in law, that the trusts in favour of the prospective daughters-in-law of the assessee are not invalid as the transfer in favour of the trust did not violate the rule against perpetuities. On a further appeal by the Revenue, the Tribunal held that the re-opening of the assessment under s. 147(b) is proper and justified, that the trusts created by the assessee and his wife are valid, and that they did not offend the rule against perpetuities. Aggrieved by the order of the Tribunal in so far as it held that the trust deeds are valid in law and that they did not offend the rule agai....
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.... Rs. 22-1-1969 1,000 3-8-1969 10,000 10-3-1969 1,500 12-3-1969 5,000 ------ 17,500 ------ The trust deed provides that the income of the trust and accumulations thereof together with the accretions thereto shall be held and administered for the benefit of the beneficiary. Under cl. 2, the assessee and his wife are constituted trustees for the trust. Clauses 4 and 6 provided that the income from the trust property after meeting all the expenses, shall be added to and form part of the trust property and the trustees shall hand over the trust property to the beneficiary absolutely within one year from the date of marriage of the assessee's son, Dileep Kumar. Clause 9 says that in the event....
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....t perpetuity is as follows : " No transfer of property can operate to create an interest which is to take effect after the lifetime of one or more persons living at the date of such transfer, and the minority of some person who shall be inexistence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong." Here the trust operates to create an interest which is to take effect within the lifetime of Dileep Kumar and Pradeep Kumar who have been living at the time of the execution of the trust deed and the operation is not postponed thereafter, beyond their lifetime. Therefore, the rule against perpetuity cannot be said to have been offended in this case as contended by the Revenue. Both the AAC and the Tribunal are, therefore, right in holding that the trust deed does not offend the rule against perpetuity. Coming to the contention of the Revenue that the purpose of the trust and also the beneficiary are vague and indeterminate, we find that the intention of the testator cannot be said to be uncertain. The object of creating the trust is to benefit the prospective wife of Dileep Kumar and if that clause fails, the benefit will h....
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....death was void for uncertainty. The reasoning given by the court in that case was that the gift by way of bequest to the testator's grand-daughter's husband having been made to an unknown person, it should be taken to be void. In Rajender Dutt v. Sham Chund Mitter [1880] ILR 6 Cal 106, in a suit for partition the validity of an arrangement entered into amongst five brothers, who formed a Hindu joint family, settling some family properties upon trust for the maintenance of the members of the family born or to be born came up for consideration and the court held that the object of the arrangement was to settle family properties upon trust for the maintenance of the members of the family born or to be born and this could not be done by a gift and that what cannot be done by a gift cannot be done by the intervention of a trust. In Allahabad Bank Ltd. v. CIT [1953] 24 ITR 519, the Supreme Court, while dealing with a trust created for payment of pensions to retired employees, held that as there is uncertainty as regards the beneficiaries in the trust deed, no legal and effective trust could be taken to have boon created. The reason for holding the trust to be illegal and ineffective is t....
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....n created for charitable purpose without any further attempt to specifically define the purpose or object of the trust cannot but be regarded as vague and uncertain; the reason being that amongst Hindus, the words It charitable purpose " have such a diversity and variety of connotations that what one set of persons may regard as a charitable purpose may not be regarded as such by another set and may even be regarded as sinful by third set. Relying on the said decision, the Revenue contends that the ultimate object mentioned in the trust deed is uncertain and vague, for the trust deed merely refers to charitable purposes without any further attempt to define specifically the purpose or object of the trust. However, in this case, the initial object of the trust deed is to benefit the would be daughter-in-law through the second son, Dileep Kumar, and if that clause fails for the reason that Dileep Kumar does not marry during his lifetime, the second beneficiary is the prospective daughter-in-law of the author's first son and only if these clauses fail, the question will arise whether the ultimate object mentioned is vague and indefinite. But the trust deed cannot be said to be inva....