Law:

Section:

Section 64, read with section 2(47), of the Income-tax Act, 1961 and sections 9, 56 and 58 of the Indian Trusts Act, 1882 - Transfer of assets - For benefit of spouse or minor child - Assessment years 1970-71 to 1973-74 - On 4-10-1945 one L created a trust in favour of his four daughters-in-law for their life; after their death interest was to pass to their respective husbands and after them to their progeny - Daughters-in-law had no power of anticipation during coverture - As provided in trust deed assessee was appointed first beneficiary for life of the income after deducting expenses - By a deed dated 23-8-1969, assessee released her interest in trust in favour of trustees - Her husband also, by separate deed, relinquished his interest in favour of trustees, and by another deed appointed his son as beneficiary- Whether, on facts, aforesaid relinquishment by assessee of her interest was valid and, therefore, income from trust fund was not assessable in her hands - Held, yes Section 2(m) of the Wealth-tax Act, 1957 - Net wealth - Chargeability of - Assessment years 1970-71 to 1973-74 - Whether in view of facts stated under head 'Transfer of assets - For benefit of spouse or minor child', assessee had no life interest in trust properties after execution of release deed by her and, thus, no asset could be included in her net wealth - Held, yes FACTS A trust was created on 4-10-1945 by Lin favour of his four daughters-in-law for their lifetime. After their death, the interest was to pass to their respective husbands and, thereafter, to their children. As per the trust deed they had no power of anticipation during coverture. As provided in the trust deed, the assessee was appointed the first beneficiary for life of the income after deducting expenses. By a deed dated 23-8-1969, the assessee released without consideration in favour of the trustees all the income arising from the trust fund and her beneficial life interest. The next person in order of beneficiaries, i.e., her husband, R, also executed a similar, separate deed. By still another deed, R appointed his son V as the sole beneficiary. The ITO held that the relinquishment by the assessee was not valid…

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