COMMISSIONER OF INCOME TAX Vs. NEVILLE N WADIA

JUDGEMENT

(1.) THIS is a reference under S. 66(1) of the Indian INCOME TAX ACT, 1922 and S. 25(1) of the Expenditure -tax Act. The questions of law referred to us for decision run as follows :

(2.) THE only facts which need to be noticed are as follows : By a deed of settlement, dated 30th January, 1947, Sir Ness Wadia settled 1,001 fully paid ordinary shares of the Bombay Dyeing and Manufacturing Co. Ltd. upon trusts mentioned in the deed. The main trusts which need to be noticed were as follows : The net dividends, interest and income of the trust were in the first instance payable to the settlor's son, Neville Ness (the assessee in this case), for the period of his life. After his death the dividends, interest and income were directed to be divided in equal half for payment over of the one half of the net dividends, interest and income respectively to one Diana Claire Wadia, being the daughter of the assessee, for the period of her life for her sole and separate use and after her death for payment of the moiety or the corpus and income to all the children or any child of Diana absolutely and if more than one in equal shares. The other half of the net dividends, interest and income were directed to be paid over to Musli, the son of the assessee, for the period of his life and after his death the other moiety and, or half of the corpus and income were directed to be paid over to all the children or any child of the said Nusli absolutely and if more than one in equal shares.

(3.) THE cl. 2 in the deed provided : "The Releasor doth hereby release and discharge the trustees . . . from and of the Trust Fund and every part thereof and from all actions, proceedings, accounts, claims and demands in respect of the same or any part thereof . . . . and he the releasor doth hereby covenant with the Trustees that he will at all times hereafter keep the Trustees and each of them . . . . . indemnified against all actions, proceedings, accounts, claims and demands . . . . . in the execution of the trusts declared by the said indenture of Settlement."