SITAL CHOWDHURY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) Amarendra Nath Chowdhury, since deceased, was the original assessee in these proceedings. At his instance, this court under Section 256(2) of the I.T. Act, 1961, directed the Tribunal to draw up a statement of case and refer the following questions of law to this court :

(2.) The facts found and/or admitted herein are of short compass. The assessee had executed a deed of trust conveying certain stocks and debentures as well as interest in some landed property valued in aggregate at Rs. 4,98,000 to his brother, J. N. Chowdhury, who was directed to hold the same in trust for the benefit of the wife and two daughters of the said J.N. Chowdhury. On the same day, J. N. Chowdhury executed a similar trust in respect of assets and properties of the same nature and value as conveyed in trust by the assessee. In the trust executed by J. N. Chowdhury, the assessee was appointed as the trustee and the benefit thereunder was conferred on the assessee's wife and his major son.

(3.) In the assessment years 1958-59 and 1959-60, the ITO in computing the income, of the assessee included the income arising from the assets transferred to J. N. Chowdhury as aforesaid under Section 16(3)(b)of the Indian I.T. Act, 1922, on the ground that the respective transfers by the assessee to his brother were made with a view to avoid the income from the assets and properties being taxed in the hands of the transferor. He treated the transfer by the assessee in favour of J. N. Chowdhury as a transfer in favour of the assessee's wife and son.