Law: Income Tax Act, 1961

Section: 64

I. Section 64 of the Income-tax Act, 1961 (Corresponding to section 16(3) of the Indian Income-tax Act, 1922) - Transfer of assets - For benefit of spouse etc. - Assessment year 1954-55 - Whether under section 16(3) of 1922 Act an assessee can only be taxed on income from trust fund for benefit of his minor child provided that in year of account minor child derived some benefit under trust deed - Held, yes - During relevant accounting year, assessee settled certain amount in trust, trustees of which were a company, assessee, his wife and brother - Trust deed provided that interest income on settled amount should be accumulated, and added to trust funds and income from enlarge trust funds be paid to assessee's daughter on attaining majority - Income derived from trust fund in relevant year of account was included by assessing authorities in assessee's income under section 16(3) of 1922 Act - Whether in relevant year of account assessee's daughter was still minor; she did not derive any benefit what so even from trust funds during her minority and even after she attained majority, she did not have any right to trust income which arose during her minority; and her only right was to enjoy income from enlarge trust funds - Held, yes - Whether, therefore, income derived from trust fund during relevant year of account was not income of assessee's daughter, but was income of trustees and income was impressed with trust, namely, that it should be added to trust corpus - Held, yes - Whether, therefore, said amount was not includible assessee's total income - Held, yes II. Section 160 of the Income-tax Act, 1961 (Corresponding to section 41(1) of the Indian Income-tax Act, 1922) - Trust/Trustees - Assessment of - Assessment year 1954-55 - Assessee's father created a trust for benefit of his four sons including assessee - Assessee was one of trustees of said trust - Trustees were to hold trust funds upon trust to pay net interest and income thereof to assessee for maintenance of himself and his wife and for maintenance, education and benefit of all his children - Taxing authorities held that assessee was sole beneficiary under trust held and, therefore, income derived from…

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