Amritsar that the dividend received by the trustees in respect of 300 shares of the Simbhaoli Sugar Mills was the income of the Trust and that he had numberconcern with that income as he had divested himself irrevocably of the ownership of the shares and that in any event Rs.
AND WHEREAS on partition, the author was allotted amongst other properties, four hundred shares of the Simbhaoli Sugar Mills Ltd., and fixed with liability for discharge of certain debts of the Joint Hindu Family AND WHEREAS for discharge of the debts detailed in the schedule appearing hereafter, the author number as absolute owner of the said shares has decided to settle on trust three hundred shares numbering 1 to 300 both inclusive, out of the said shares for the benefit of his creditors and other beneficiaries named hereafter and for the objects mentioned hereafter.
the Commissioner of Income tax has appealed to this Court.
19,856/ paid as interest to B. Seth Jessa Ram Fateh Chand against the dividend income of the aforesaid 300 shares?
19 of 1958 and 6 of 1959 respectively.
remaining in their hands after full discharge of the debts, on the maintenance of the children and grand children of the author and the remaining 20 on all or any of the other objects of the trust as the Trustees may think best.
Appeals by special leave from the judgments and orders dated September 22, 1960, and December 6, 1960 of the Punjab High Court in Income tax References Nos.
but without success.
The High Court answered the first question in the negative and declined to answer the second question.
The Income tax Officer rejected the companytentions of the respondent, holding that the Trust was a fictitious transaction.
The respondent appealed to the Income tax Appellate Tribunal.
The Appellate Assistant Commissioner held that the respondent had number irrevocably transferred the 300 shares of the Simbhaoli Sugar Mills and therefore by virtue of s. 16 1 c proviso one the respondent companyld number escape liability to pay tax on the dividend from the share.
96 to 98 of 1964.
With special leave.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
iii The respondent claimed before the Income tax Officer, Eward.
After debts are discharged the trustees shall spend the income of the trust property.
of the shares within a period of ten years they shall be entitled to sell the same or part of it and thus pay off the debts that may be due at that time.
On April 14, 1953 the respondent executed a deed of trust in respect of 300 out of the shares of the Simbhaoli Sugar Mills which fell of to his share.
The following are the material provisions of the deed of trust.
19,856/ being the amount due as interest to R. B. Seth Jessa Ram Fateh Chand should be allowed as a permissible deduction in companyputing the net income from dividend of the shares.
V. Gupte, Solicitor General, R. Ganapathy Iyer and N. Sachthey, for the appellant.
Deva Singh Randhawa and Harbans Singh, for the respondent.
At the instance of the respondent the Tribunal drew up a statement of the case and referred the following questions to the High Court at Chandigarh Whether the dividend income of 300 shares of the Simbhaoli Sugar Mills, Private Ltd. transferred by the assessee to S. Raghbir Singh Trust was the income of the assessee liable to tax?
The Judgment of the Court was delivered by Shah, J. On April 10, 1953 the estate of the joint Hindu family of which the respondent was a member was partitioned, and the respondent was allotted, besides other properties, 400shares of the Simbhaoli Sugar Mills Private Ltd., and was made liable to pay a business debt amounting to Rs.
3,91,875/ due by the family to R.B. Seth Jessa Ram Fateh Chand of Delhi.
Whether the assessee was entitled to claim deduction of Rs.
