TaxTMI 
TaxTMI 
1978 (4) TMI 38
X X X X Extracts X X X X
X X X X Extracts X X X X
....operty. For the first time in the assessment years under reference the assessee claimed that the income from the said property should not be included in his total income. It was found by the ITO that all along in the past the income from the said property was included in the total income of the assessee and that the assessee, in fact, enjoyed the rent from the said property up to the assessment year 1966-67. In this view of the matter, he included " the value of the dwelling house " of Rs. 2,534 and Rs. 1,681, respectively, in the total income of the assessee for the two years under reference. An appeal was preferred before the AAC by the assessee. It was argued that it was of no importance whether the assessee had previously claimed deduction of the value of the dwelling house or not. It was contended that since the assessee had created an irrevocable trust in respect of the said property, the ITO was not justified in including the income from the said property in the total income of the assessee. Upholding the contentions of the appellant, the AAC, while deleting the aforesaid sums from the total income of the assessee observed as under: "First point of dispute is whether t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o 24 of the Act were applicable only to an assessee who is the owner of the house property. While disposing of the appeal the Tribunal observed that s. 64(v) of the 1961 Act was the section which the AAC ought to have considered while deciding the appeal. It was further observed that s. 64 applied to both revocable as well as irrevocable transfers. As regards the submissions made on behalf of the assessee about the ownership of the house property in question, the Tribunal referred to s. 27(1) of the 1961 Act, which says that an individual who transfers otherwise than for adequate consideration any house property to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor child not being a married, daughter, shall be deemed to be the owner of the house property so transferred. Thus, the Tribunal allowed the appeal and set aside the order of the AAC and restored that of the ITO. As stated earlier, by the deed of indenture dated March 5, 1962, the assessee settled his property at 35A, Badan Roy Lane, in a trust for the benefit of his wife and children. In order to give effect to the desire and on consideration for making provision for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rsons including the assessee himself, his wife and brother. The scheme of the trust deed was that the sum of Rs. 25,000 was set apart by the assessee and it was provided that the interest on that amount should be accumulated and added to the corpus and the minor daughter of the assessee was to receive the income from the corpus, increased by the addition of interest, when he attained the age of 18 on February 1, 1959. On a true construction of cl. (b) of s. 16(3), the Supreme Court held that no benefit accrued to the minor daughter in the year of account and the sum of Rs. 410 could not be included in the total income of the assessee. So, there could not be any income if no income accrues or no benefit is derived. It was found to be not consistent with the scheme of s. 16 that the income or benefit which is non-existent so far as the minor child was concerned should be included in the income of the father. In the case in hand we are not concerned with the question of accumulated income nor with the question as to whether any benefit accrued to the wife and children of the assessee in the year of account. The decision cited by the learned counsel for the assessee, therefore, has no ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation, by the husband, for the benefit of his wife has to be included in the husband's taxable income (vide sub-s. (3)(b) ). The same sub-s. (3) of s. 16 of the Act provides for the income from the assets transferred by a father to his minor child, to be included in the total income of the father, if the assets have been transferred directly or indirectly, to the minor child, not being a married daughter, otherwise than for adequate consideration, vide sub-s. (3)(a)(iv). The above is the scheme of s. 16(3) of the Act. It must also be noted that under s. 16(3)(a), sub-cls. (iii) and (iv), and also cl. (b) of sub-s. (3), the transfer contemplated thereunder should have been " otherwise than for adequate consideration ". Thus, it was held by their Lordships that the scheme of s. 16(3)(b) requires that the assessee can only be taxed on the income from a trust fund created for the benefit of his wife or minor child or both if in the relevant year of account the wife or the minor child or both have derived some benefit under the trust deed. That is, the wife or the minor child, either has received the income or the income has accrued to them or they have a beneficial interest, in the inc....