Law:

Section:

JUDGMENT Chagla, CJ.-A rather interesting question arises on this reference as to the correct interpretation of Section 16(1)(c) and provisos 1 and 2 to that clause. There was a joint and undivided Hindu family consisting of one Ramjibhai, his son Ratilal, his daughter Pushpa and his wife Kamlawanti. On the 27th of July, 1933, a trust deed was executed with regard to a property belonging to the joint family which was executed by Ramjibhai and Ratilal. The effect of this trust deed was that the income of this property was to be enjoyed by Ramjibhai during his lifetime; after his death the income was to be enjoyed by Ratilal and certain right of residence was given to Kamlawanti. After the death of Ratilal the income was to be enjoyed by his widow and the sons of Ratilal who were in existence at the time of the death of the survivor of Ramjibhai ahd Ratilal. There was a power of revocation given to Ramjibhai. Ramjibhai died on the 23rd of July, 1940. After his death Ratilal enjoyed the income of his property. The joint family continues to enjoy the same status and the assessee before us is this joint Hindu family and the question that arises is whether the income received by Ratilal out of this property can be considered to be the income of the joint family for the purposes of taxation. In other words whether the family is liable to pay tax on the income of the property which is enjoyed by Ratilal under the provisions of the trust deed which is referred to above. Now Section 16(1)(c) provides (to the extent it is material for the purposes of this reference) that all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be the income of the transferor. The power of revocation which Ramjibhai had and which might have possibly attracted the application of this clause came to an end on his death on the 23rd of July, 1940. Therefore, when we are dealing with the assessment years 1942-43, 1943-44, 1944-45 and 1945-46 there is no power of revocation vested in Ratilal or anyone else under the trust deed. Therefore the income which Ratilal receives is not by virtue of a revocable transfer. Then we come to the first proviso which…

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