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Section 256, read with section 160, of the Income-tax Act, 1961 - Reference - Question of law - Assessment years 1980-81 and 1981-82 - On very day assessee created a trust for benefit of his minor son, he also entered into an agreement with it for sale of his business to it - Whether referable question of law arose from Tribunal's order upholding validity of trust and excluding income from business transferred to trust from assessee's income - Held, yes FACTS By a deed dated 2-4-1979, the assessee and his wife created a trust in respect of a certain amount held by them, for the benefit of their minor son. On the very day when the trust deed came into existence, the assessee entered into an agreement as the proprietor of his firm for the sale of his printing business to the trust for a consideration based on book value. The ITO as well as the Commissioner (Appeals) held that no valid or genuine trust had come into existence which could legitimately claim ownership of the printing press and, thus, included the income from the trust in the hands of the assessee. On further appeal, the Tribunal upheld the validity of the trust and excluded the income from the business transferred to the trust from the assessee's income. On an application under section 256(2): HELD The fact that the assessee was in control of the business as a whole was very much stressed. It was after adverting to the trust deed and the attendant circumstances of the various transactions that the Tribunal held that there was a valid trust and that it could not be stated that the transaction was a device to reduce the tax liability. An interpretation of the aforesaid deed fell for consideration. The trust deed as also the agreement took place on the same day. Both the transactions should be considered together. All these aspects required a detailed consideration to find whether there was a valid creation of a trust and whether such trust was a genuine one. Hence, a referable question of law arose out of the Tribunal's order. P.K.R. Menon and N.R.K. Nair for the Petitioner. P. Balachandran for the Respondent. JUDGMENT Paripoornan, J.-These are connected cases. The revenue is the petitioner in all the…

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