RAGHBIR SINGH S Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference by the Income-tax Appellate Tribunal under section 66 of the Indian Income-tax Act asking for an opinion of this court on two questions of law. Before setting out the questions, it is necessary to state the facts of the case. The assessee in this case is Sardar Raghbir Singh Who was originally a member of a joint Hindu family consisting of himself and his sons as coparceners and also his wife. On April 10, 1953 a disruption of the joint Hindu family took place and the assets were partitioned. The assessee received 400 shares of the Simbhoali Sugar Mill Private Ltd. among other assets of the joint Hindu family. He was also assigned the obligation to pay off a debt of nearly Rs. 4,00,000 which was contracted by the joint Hindu family and was due to Rai Bahadur Seth Jessa Ram Fateh Chand. On April 14,1953 the assessee executed a deed of trust whereby he constituted a trust in respect of 300 out of the 400 shares of the Simbhoali sugar Mills and the trustees appointed under the trust undertook to accept the obligation and to carry out the objects of the trust. The objects of the trust were in the first place to pay of the debt due to Rai Bahadur Seth Jessa Ram Fateh Chand out of the income of these shares and thereafter to provide for the maintenance and education of the assessees children and grand-children. Eighty per cent. of the income from the trust was reserved for this purpose and the remaining 20 per cent, was to be expended on various charitable purpose which are enumerated in the trust deed printed at page 4 of the paper book. The trustees were authorized to mortgage the shares in case they thought it necessary to do so in order to pay the debt.

(2.) THE matter was taken to the Income-tax Appellate Tribunal and paragraph of their order deals with the matter :