COMMISSIONER OF INCOME TAX Vs. BRAHAM DUTT BHARGAVA

JUDGEMENT

(1.) THIS is a reference by the Income-tax Appellate Tribunal, Delhi Bench, in pursuance of a direction made by a bench of this court under section 66(2) of the Indian Income-tax Act.

(2.) THE material facts are these. THE assessee is a Hindu undivided family consisting of two adult members, Braham Dutt Bhargava and Mahesh Dutt Bhargava, being brothers, and of their minor sons, each brother having three sons in number. THE assessment year under consideration was 1952-53, the relevant accounting year being 1951-52. THE dispute is about certain shares which originally belonged to the assessee family but which were settled in trust by the manager of this Hindu undivided family, Braham Dutt Bhargava, by a trust deed (exhibit A) dated September 3, 1951, to which the other brother, Mahesh Dutt Bhargava, was a consenting party. By this trust deed, the shares in question which were of the face value of Rs. 1,00,068-8-0, and the particulars whereof were given in the schedule annexed to the deed, were set apart by way of trust in pursuance of a declaration to that effect made by the manager, Braham Dutt Bhargava, on the occasion of the "Yagyopavit Sanskar" of the three sons of Braham Dutt Bhargava and two sons of Mahesh Dutt Bhargava on July 6, 1951, the object of the trust being to meet the expenses of the education of the said sons of the two brothers and of such other son or sons of them who were in existence already, or who may hereafter be born, after their "Yagyopavit Sanskar" had been performed. THE first trustees appointed under the trust were Braham Dutt Bhargava and Mahesh Dutt Bhargava. While assessing the assessee family to income-tax for the year 1952-53, Income-tax Officer negatived the contention of the assessee that this income no longer belonged to the Hindu undivided family and included it in the total income of the assessee. In the opinion of the Income-tax Officer :

(3.) BE that as it may, we consider it safer to tackle the reference on the merits in so far as we may. The crucial question raised before us is whether the trust or the gift made by the manager of the assessee Hindu undivided family with the consent of the only other adult member of the family by which a provision was made for the education of the sons of the two brothers is unlawful or void ab initio. For, if it is ab initio void, then there may be something for the view that the property still continues to form part of the assets of the assessee Hindu undivided family. But if at the worst it is voidable, then it clearly seems to us that the transaction must hold good, until on impeachment by any other member of the family it is held to be bad. The question which arises for determination in these circumstances is, whether a gift made by the karta of a joint Hindu family of the kind we have before us is altogether void. We may make it clear that it was throughout assumed before us that the same principles would govern the making of a valid trust as are applicable to the making of a gift by a member of a joint Hindu family.