PANDIT R H Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a consolidated reference arising out of the Tribunal's three orders dated April 3, 1963. The question of law referred to us under s. 66(1) of the Indian IT Act, 1922, is as follows :

(2.) ONE Mrs. Sharda R. Pandit executed three deeds of trust, dated June 27, 1943, thereunder settling certain shares of joint-stock companies. These three respective trusts were respectively for the benefit of the settlor's three sons, Vasantkumar, Rajendrakumar and Krishnakumar, and their wives and issues. All the three deeds of trust are in similar language and one specimen deed of trust is annexure "A" to the statement of the case.

(3.) FOR the appreciation of the above rival contentions, the following facts require to be noticed : As appears from the specimen deed of trust, dated October 2, 1943, annexure "A" to the statement of the case, each of the deeds of trust was specifically made to make separate provision under each deed respectively for one of the three sons of the settlor and his wife and issues. The scheme of the deeds of trust relevant for the purposes of this reference is to be found in sub-cls. (b), (c), (d), (e) and (f) of cl. 2 of the deeds of trust. Under sub-cl. (b), the net income of the deed of trust, which is annexure "A", is payable to the settlor's son, Rajendrakumar, for and during the term of his natural life. Under sub-cl. (c), upon the death of Rajendra kumar, the trustees are directed to set apart 1/8th of the corpus and to pay the income of such 1/8th to the widow of Rajendrakumar during her lifetime. Having regard to the present facts, the provisions in sub-cl. (d) are not applicable. Under that sub-clause, in the event of Rajendrakumar leaving him surviving only one daughter or the issue of only one daughter, the provision made is that a moiety of the corpus should be paid over to this one daughter and/or her issues in the proportions mentioned in the first part of the sub- clause. The remaining moiety of the corpus is directed to be divided amongst the brothers and sisters of Rajendrakumar and/or their issue in such shares and proportions and on such terms as Rajendrakumar may by deed and/or will appoint and in default of such appointment, this one moiety of the corpus is directed to be paid over to the brothers of Rajendrakumar and/or their issues in the manner mentioned in the second part of sub-cl. (d). Sub- cl. (e) which is applicable to the facts existing in the accounting year provides that upon the death of Rajendrakumar leaving children or remoter issues the trustees should divide the corpus of the trust fund amongst the children and/or the remoter issue "living at the time of the death" of Rajendra kumar in the proportions mentioned in sub-cl. (e). Under sub-cl. (f), not withstanding the provisions in sub-cl. (e), it is directed that in the event of Rajendrakumar dying after adopting a son and such son and/ or his issue surviving Rajendrakumar, Rajendrakumar should have the right and power to give to such adopted son and/or his issue a share of the corpus not exceeding the share which such adopted son or issue would have received if he were a natural born legitimate son. Similar are the provisions in the other trust deeds which are made in favour of the families of the other two sons of the settlor.