Commissioner of Income Tax, Allahabad vs Savitri Devi Onkar Mal

We have heard learned counsel for the Revenue. The following question has been referred in the form of this reference:

Whether on the facts and in the circumstances of the case, the Tribunal was in law justified in holding that only one third and not the entire income of the Trust was assessable in the hands of the assessee.

It appears that a trust was created by the assessee which was not revocable trust and of which the assessee or the author of the trust was beneficiary only to the extent of 1/3 rd income of the Trust. This is the finding of fact recorded by the authorities below and neither we can interfere with such finding, nor the correctness of such finding has been referred.

The trust not being revocable and assessee beings the beneficiary to the extent of only 1/3 rd income of the trust, said 1/3 rd income of the trust was held to be assessable in the hands of the assessee. The contention of the revenue, as is clear from the question referred is that not 1/3 rd but the entire income of the trust should have been assessed in the hands of the assessee.

On the face of it when the trust was not revocable and when the assessee was beneficiary to the extent only of 1/3 rd of the income of the trust, there appears to be no good reason why the entire income of the trust should be assessed in the hands of the assessee.

Learned counsel for the revenue relies upon a decision of the Kolkata High Court in the case of Chunilal Mulji Motani and Others Vs. Commissioner of Income Tax, . That was a case where the transfer of the property lo the trust was held to be revocable.

As already staled above, in the present case the trust has been held to be irrevocable. In the circumstances, our answer to the question referred, is that the Tribunal was justified in holding that only 1/3 rd and not the entire income of the trust it was not assessable in the hands of the assessee. Reference is answered accordingly.