TaxTMI 
TaxTMI 
1979 (1) TMI 251
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....for that purpose on June 3, 1908. By that document Sankaranarayana Iyer became the first trustee for life, and it was provided that after him the senior-most member would be the trustee, by turns. Sankaranarayana died and defendant No. 1 became the managing trustee of the trust. There was a suit for partition of the family properties including house No. 48A, and it was settled by a compromise under which a preliminary decree dated September 12, 1956 was drawn up for the sale of the properties amongst the members of the family. Defendant No. 1 purchased the suit property for Rs. 21,500/- for the aforesaid trust on April 19, 1959. A final decree was drawn up on November 29, 1959 in which house No. 48A was shown as the property of the trust. D....
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....einafter referred to as the Act, applied to the trust in question and that it was necessary for the plaintiffs to prove that defendant No. 1 did not exercise his discretionary power of selling the suit property "reasonably and in good faith" and that he indirectly purchased it for himself, in the name of his son (defendant No. 2), within the meaning of Section 49 and 52 of the Act. 4. There is some controversy on the question whether defendant No. 1 made an outright purchase of the suit property for and on behalf of the trust for Rs. 21,500/- on April 19, 1959, or whether he intended to purchase it for himself and then decided to pass it on to the trust, for defendants have led their evidence to show that the property was allowed to be s....
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....discharge of his duties as the trustee. It does not require much argument to proceed to the inevitable further conclusion that the rule prescribed by the aforesaid sections of the Act cannot be evaded by making a sale in the name of the trustee's partner or son, for that would, in fact and substance, indirectly benefit the trustee. Where therefore a trustee makes the sale of a property belonging to the trust, without any compelling reason, in favour of his son, without obtaining the permission of the court concerned, it is the duty of the court, in which the sale is challenged, to examine whether the trustee has acted reasonably and in good faith or whether he has committed a breach of the trust by benefitting himself from the transacti....
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...., at a family sale. It appears from the statement of defendant No. 2 that the property was capable of, or could fetch a rent of about Rs. 190/- per mensem, amounting to Rs. 2,280/- per annum. It has also been admitted that the sum of Rs. 25,000/- was not utilised by the trustee (defendant No. 1) for purchasing any other better property, but was invested in fixed deposit with a bank at 3 1/2 per cent interest per annum. That could yield an income of only Rs. 875/- per annum. The trust therefore lost heavily in the bargain. What is worse, defendant No. 1 has not been able to explain how the sale could be said to be beneficial to the trust and how he could possibly contend that he acted as a man of ordinary prudence in slashing down the income....
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....ot detract from the basic fact that a much higher offer had been made by a man of substance. 8. Instead of examining the appeal with due regard to the abovementioned evidence, the High Court was obsessed by a consideration of the evidence which had been led for the purpose of showing that while defendant No. 1 had purchased the property for himself on April 19, 1959, for Rs. 21,500/-, he gave up that advantage in favour of the trust. The evidence on the point is not unequivocal, for it may well be that defendant No. 1 did not want to obtain a sale deed in his own name for other reasons, but even if it were assumed that he made a gesture of goodwill in favour of the trust on April 19, 1959, he could not possibly absolve himself from what ....