Law: Income Tax Act, 1922

Section: 16(1)(c)

Section 61 of the Income-tax Act, 1961 [Corresponding to section 16(1)(c) of the Indian Income-tax Act, 1922] - Transfer of asses - Revocable - Assessment year 1950-51 - Assessee executed trust deed settling all his properties and other asset or trust for immediate benefit of assessee and his three sons and ultimate benefit of his daughters-in-law and their heirs - According to revenue, trust deed contained more than one provision by reason whereof transfer of assets to trustees could be said to be revocable within meaning of section 16(1)(c) and hence all income from trust property must be deemed to be income of assessee and taxed as such - Whether where settlement enables a settlor to get a retransfer of assets or to resume power over same after date of transfer, whole settlement becomes revocable and settlor becomes assessable in respect of whole income - Held, yes - Whether assessability of settlor, in instance case, could only arise with respect to portion of income in which he was found to have a direct or indirect interest without affecting chargeability of other portions of income to others where no question of revocability arose, and, consequently, only sum payable to settlor per month under clause (i) of settlement became assessable in his hands - Held, yes - Whether where properties were settled upon trust, but subject to payment of a specified sum, which might be realised by settlor by sale of some property and with a charge in favour of settlor for deficit on such sales, net result left settlor with contingent right to follow all properties and put them up to sale, and this gave him right to reassume power directly or indirectly over those assets and therefore, but for third proviso to section 16(1)(c) revocability even with regard to part of assets or income rendered entire settlement revocable under that section - Held, yes - Whether, on aforesaid whole income of trust fell within ambit of section 16(1)(c) of 1922 Act and must be deemed to be income of assessee and taxed as such - Held, yes FACTS The settlor owned valuable immovable properties situate in Calcutta and elsewhere. Being minded to settle these for the benefit of himself, his three…

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