COMMISSIONER OF INCOME TAX Vs. GORDHANDAS K VORA

JUDGEMENT

(1.) THIS is a reference by the Income -tax Appellate Tribunal, Bombay Bench 'C', under section 66(1) of the Indian Income -tax Act, 1922. The reference arises out of the assessment proceedings under the Indian Income -tax Act for the assessment years 1957 -58 and 1958 -59, the relevant account years being Samvat years 2012 and 2013. Necessary facts material for the purpose of this reference are as follows : The assessee is one Gordhandas K. Vora who is the only son of one Kishandas Vora and a grandson of one Sir Manmohandas Ramji, sir Manmohandas had three sons, Kishandas, Narandas and Bhagwandas. During his lifetime Manmohandas gifted to his son, Kishandas, shares of several companies. Kishandas died intestate in 1930 and on his death his son Gordhandas inherited those shares; they became ancestral property in his hands. A son was born to Gordhandas in 1953. It is the agreed position that the property that Gordhandas inherited in this manner from his father, Kishandas, was ancestral property in his hands and during the material account years it belonged to the Hindu undivided family consisting of Gordhandas and his son as coparceners, and his wife and a daughter as members of it.

(2.) GORDHANDAS also received some property from Sir Manmohandas in two different modes. On February 25, 1927, Manmohandas made a settlement of certain immovable properties in favour of his three sons. The trust deed provided that income was to be paid to the settlor during his lifetime, and on his death the trustees were to make over, transfer, assign and assure the trust property to the sons of the settlor as tenants -in -common in equal shares for their own absolute use and benefit. A copy of the deed of settlement has been annexed to the statement of the case as annexure 'A'. However, during the lifetime of Manmohandas, Kishandas died on February 4, 1930. On his death by a further deed made on March 17, 1930, the original trust settlement stood amended and by the amendment it was provided that the portion going to Kishandas on the settlor's death would be held in trust for Gordhandas during his minority and would be handed over to him on his attaining majority, it being stated that the amendment was made out of abundant caution.

(3.) IT may be mentioned that on April 21, 1948, the trustees of the trust settlement transferred the immovable property to the three beneficiaries including the assessee. By a suit filed subsequently in the Bombay High Court the three beneficiaries -Narandas, Bhagwandas and Gordhandas -partitioned the immovable property.