YOGINDRAPRASAD N MAFATLAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference made by the Tribunal to this court under section 256(1) of the Income -tax Act, 1961, the following question has been referred to us for our determination :

(2.) THE question relates to the assessment year 1962 -63, the relevant previous year being 31st March, 1962. Assessee, Yogindraprasad N. Mafatlal, who is an individual, created three separate trusts by three deeds executed by him on the same day, namely, 26th March, 1959, in favour of his three minor daughters, (1) Kunti, (2) Aparna and (3) Gayatri. In the relevant accounting year all these three daughters were minors and unmarried. Under the first trust, which may conveniently be called 'Kunti Family Trust', the assessee, in the first instance, settled 150 ordinary shares of Mafatlal Gagalbhai and Co. (Private) Ltd. and later on during 1960 -61, 100 shares and 60 ordinary shares of the same company were further added to the trust fund; under the second trust, which may conveniently be called 'Aparna Family Trust', the assessee settled 75 shares of the same company, while under the third trust, which may conveniently be called 'Gayatri Family Trust', the assessee settled another 75 shares of the same company. The trustees to whom the shares constituting the trust fund were transferred under the three trusts were Arvind N. Mafatlal, Rajesh N. Mafatlal and Hemant B. Mafatlal. Since the provisions of the three trust deeds are almost similar to one another including the preamble, we may set out the preamble and the relevant portions of one of the trust deeds, namely, the trust deed relating to Kunti Family Trust. The preamble runs thus :

(3.) IN the Aparna Family Trust the relevant operative part consisting in clause 3 thereof runs as follows :