COMMISSIONER OF INCOME TAX Vs. CHANDRAKANTH M K

JUDGEMENT

(1.) AT the instance of the Department, the Tribunal, referred the following question for the opinion of this Court, for the asst. yr. 1977-78 and 1978-79 under s. 256(1) of IT Act, 1961 :

(2.) FOR the asst. yrs. 1977-78 and 1978-79, the relevant previous years ended on 12th April, 1977 and 12th April, 1978 respectively. The assessee is an individual deriving income from property, business and share income from a firm called M/s. M. K. Krishna Chetty. On 1st October, 1969, the assessee settled upon trust for the benefit of his prospective son-in-law and prospective daughter-in-law a sum of Rs. 15,000 each. In the deeds of settlement executed for this purpose, there was a direction that the amount has to be invested in the discretion of the trustees so as to produce good income and that income so earned should be accumulated till such time as the daughter and son got married. At the time the daughter was a minor aged about 6 years. In cl. 19 of the trust deed it was declared that the trust is 'irrevocable'. Clause 22 of the trust deed provided that "If the said intended marriage is not solemnised for any unforeseen reason within a period of 20 years from the date of the trust deed, the deed of trust would become void and the trust fund shall become reinvested in the settlor as a beneficial owner thereof, subject to as aforesaid, the settlor shall have no manner of right, title or interest in the said money or its accumulations or accretions thereof". By a supplementary deed executed on 26th October, 1979, the said cl. 22 had been amended to read :

(3.) WE have heard learned senior standing counsel for the Department as well as learned counsel appearing for the assessee. WE have already set out the facts in detail. WE have also incorporated the relevant clauses in both the trust deeds for the sake of convenience in the foregoing paragraphs. Secs. 61 to 63 of the IT Act, 1961 state as under :