{"id":233300,"date":"1965-04-09T00:00:00","date_gmt":"1965-04-08T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-raghbir-singh-on-9-april-1965"},"modified":"2016-05-04T13:40:42","modified_gmt":"2016-05-04T08:10:42","slug":"commissioner-of-income-tax-vs-raghbir-singh-on-9-april-1965","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-raghbir-singh-on-9-april-1965","title":{"rendered":"Commissioner Of Income-Tax, … vs Raghbir Singh on 9 April, 1965"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Commissioner Of Income-Tax, … vs Raghbir Singh on 9 April, 1965<\/div>\n
Equivalent citations: 1966 AIR 18, \t\t 1965 SCR (3) 684<\/div>\n
Author: S C.<\/div>\n
Bench: Shah, J.C.<\/div>\n
           PETITIONER:\nCOMMISSIONER OF INCOME-TAX, PUNJAB,  JAMMU &KASHMIR, HIMACHA\n\n\tVs.\n\nRESPONDENT:\nRAGHBIR SINGH\n\nDATE OF JUDGMENT:\n09\/04\/1965\n\nBENCH:\nSHAH, J.C.\nBENCH:\nSHAH, J.C.\nSUBBARAO, K.\nSIKRI, S.M.\n\nCITATION:\n 1966 AIR   18\t\t  1965 SCR  (3) 684\n CITATOR INFO :\n R\t    1968 SC 189\t (13)\n R\t    1991 SC 331\t (3)\n\n\nACT:\n    Indian   Income-tax\t  Act,\t1922  (11   of\t 1922),\t  s.\n16.(1)(c)--Deed of trust--Trustees directed to pay debts  of\nsettlor\t and  only  thereafter to  apply  trust\t income\t and\nproperty   to  the  various  purposes  of  the\t trust--Such\ndirection whether makes trust revocable--Whether property of\ntrust indirectly re-transferred to the settlor--Income\tfrom\ntrust whether to be taxed in hands of settlor.\n\n\n\nHEADNOTE:\n   The\trespondent  executed a deed of trust in\t respect  of\ncertain shares owned by him in a company. The deed  directed\nthe  trustees to apply the income and property of the  trust\nin the first instance\t for paying off the settlor's debts,\nand  thereafter\t for  other  purposes  of  the\ttrust.\t  In\nproceedings  under  the Indian Income-tax Act, 1922  it\t was\nheld  by  the  Income-tax  Officer  that  the  trust  was  a\nfictitious    transaction.     The    Appellate\t   Assistant\nCommissioner  held that the transfer of the shares  for\t the\npurpose of the trust was not irrevocable and therefore under\nthe  proviso to s. 16(1)(c) the respondent could not  escape\nliability.  The Tribunal upheld the order of  the  Assistant\nCommissioner but referred to the High Court, inter alia, the\nquestion whether the income from the trust property could be\ntaxed in the hands of the assessee.  The High Court answered\nthe  question in the negative. The Commissioner\t of  Income-\ntax, appealed to this Court.\nHELD:  After  the  execution  of  the  deed  of\t  settlement\nthe  income  from the shares arose to the trustees  and\t was\nliable\tto  be\tapplied for the purposes  mentioned  in\t the\nde.ed.\tThe income had first to be applied for\tsatisfaction\nof  debts which the settlor was under an obligation to\tpay,\nbut  this did not amount to a re-transfer of the  income  or\nassets to the settlor, nor did it invest the settlor with  a\npower  to re-assume the income or assets.  The\tassests\t and\nthe income were unmistakably impressed with the\t obligations\narising\t out of the trust. The settlor certainly obtained  a\nbenefit\t from the trust consequent upon the satisfaction  of\nhis  liability\tbut on that account the first proviso to  s.\n16(1) was not attracted. [690D-F]\n   The\tproviso\t contemplates  cases in\t which\tthere  is  a\nprovision  for retransfer of the income or assets  and\tsuch\nprovision is for retransfer directly or indirectly.  It also\ncontemplates cases where there is a provision which  confers\na  right upon the settler to reassume power over the  income\nor  assets directly or indirectly.  It is the provision\t for\nretransfer directly or indirectly of income or assets or for\nreassumption of power directly, or indirectly over income or\nassets\twhich brings the case within the proviso.  Cases  in\nwhich  there is a settlement, but there is no  provision  in\nthe settlement for retransfer or right to reassume power  do\nnot  fall  within the proviso, even if as a  result  of\t the\nsettlement, the settler obtains some benefit. 1[690G, H]\n    Ramji,  Keshavji v. C.I.T. Bombay, [1945] 13 I.T.R.\t 105\nand  D.R.  Shahapura  v.  C.I.T.,  Bombay  14,\tI.T.R.\t 781\napproved.\n\t 685\n\n\n\nJUDGMENT:\n<\/pre>\n
    CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos. 96  to
\n98 of 1964.\n<\/p>\n
    Appeals  by special leave from the judgments and  orders
\ndated  September  22,\t1960, and December 6,  1960  of\t the
\nPunjab\tHigh Court in Income-tax References Nos. 19 of\t1958
\nand 6 of 1959 respectively.\n<\/p>\n
    S.V.  Gupte,  Solicitor-General, R. Ganapathy  Iyer\t and
\nR.N. Sachthey, for the appellant.\n<\/p>\n
    Deva   Singh  Randhawa  and\t Harbans  Singh,   for\t the
\nrespondent.\n<\/p>\n
The Judgment of the Court was delivered by
\n   Shah, J. On April 10,  1953 the estate of the joint Hindu
\nfamily of which the respondent was a member was partitioned,
\nand the respondent was allotted,  besides other\t properties,
\n400shares of the Simbhaoli Sugar Mills Private Ltd., and was
\nmade
\nliable\tto pay a business debt amounting to  Rs.  3,91,875\/-
\ndue  by\t the family to R.B. Seth Jessa Ram  Fateh  Chand  of
\nDelhi.\tOn
\nApril  14, 1953 the respondent executed a deed of  trust  in
\nrespect
\nof 300 out of the shares of the Simbhaoli Sugar Mills  which
\nfell
\nof  to his share. The following are the material  provisions
\nof the deed of trust.\n<\/p>\n
\t\t “AND  WHEREAS on partition, the author\t was
\n\t      allotted\t amongst  other\t  properties,\tfour
\n\t      hundred  shares of the Simbhaoli\tSugar  Mills
\n\t      Ltd.,  and fixed with liability for  discharge
\n\t      of certain debts of the Joint Hindu Family AND
\n\t      WHEREAS for discharge of the debts detailed in
\n\t      the  schedule appearing hereafter, the  author
\n\t      now  as absolute owner of the said shares\t has
\n\t      decided  to  settle  on  trust  three  hundred
\n\t      shares numbering 1 to 300 both inclusive,\t out
\n\t      of  the  said shares for the  benefit  of\t his
\n\t      creditors\t  and  other   beneficiaries   named
\n\t      hereafter\t  and  for  the\t objects   mentioned
\n\t      hereafter.\n<\/p><\/blockquote>\n
\t      2. The author as holder of 300 shares
\n\t      out  of the  capital of Simbhaoli Sugar  Mills
\n\t      Ltd.  divesting  himself\tof  all\t proprietary
\n\t      rights  in  the said shares.  hereby  declares
\n\t      that  the said shares shall from this  day  be
\n\t      irrevocably  held on Trust by the Trustees  to
\n\t      be used by them for all or any of the purposes
\n\t      following, that is to say :–\n<\/p><\/blockquote>\n
\t\t    (a) To pay off the debts as detailed  in
\n\t      Schedule ‘A’ attached hereto: These debts were
\n\t      incurred\tfor the benefit of the\tJoint  Hindu
\n\t      Family of the author and on disruption of\t the
\n\t      Joint Hindu Family and partition of properties
\n\t      among its members, made payable by the author.\n<\/p><\/blockquote>\n
\t      686<\/span><\/p>\n
\t      And after his debts are paid off.\n<\/p><\/blockquote>\n
\t\t    (b)\t To provide for the maintenance\t and
\n\t      education\t of the children and grand  children
\n\t      of the author.\n<\/p><\/blockquote>\n
\t      (c)  To  open and run  Hospitals\tand  Nursing
\n\t      Homes.\n<\/p><\/blockquote>\n
\t\t    (d)\t To open and run School\t or  SchooLs
\n\t      for   the\t education  of\tboys  or  girls\t  in
\n\t      scientific and technical subjects.
\n\t      To  open\tand maintain a reading\troom  and  a
\n\t      lending library.\n<\/p><\/blockquote>\n
\t\t    (f)\t To provide for the maintenance\t and
\n\t      education\t of orphans, widows and poor  people
\n\t      and  for that to give scholarships for  inland
\n\t      and overseas studies to found orphanage. widow
\n\t      houses  and  poor houses and to do  all  other
\n\t      things  that  the trustees may  deem  fit\t for
\n\t      carrying out the objects of the Trust.”\n<\/p><\/blockquote>\n
By  el.\t 3  four  persons  including  the  respondent\twere
\nappointed  trustees,  and  the respondent was  to  hold\t the
\noffice\tof Chairman of the Trust during his  lifetime.\t The
\ntrust deed then provided:\n<\/p>\n
\t\t “In  the books of the Company,\t the  shares
\n\t      will stand in the name of the Chairman for the
\n\t      time being, who will have the power to operate
\n\t      the Bank accounts of the Trust, to preside  at
\n\t\t\t    the meetings, exercise the right of th
\ne vote in
\n\t      respect of the shares of the Trust.”
\n\t      Clause 5 provided:\n<\/p><\/blockquote>\n
\t\t “It  is hereby declared that  the  trustees
\n\t      shall have the following powers in addition to
\n\t      the  powers  and\tthe  authorities  hereinfore
\n\t      contained:–\n<\/p><\/blockquote>\n
\t\t   (i) The trustees shall not be entitled to
\n\t      sell  the shares except as provided  hereafter
\n\t      but  they can mortgage or pledge the same\t for
\n\t      raising  funds as they may feel necessary\t for
\n\t      paying off the debts of the author, provided\n<\/p><\/blockquote>\n
\t      (ii)  …………\n<\/p><\/blockquote>\n
\t      (iii)  …………..\n<\/p><\/blockquote>\n
\t      (iv) ……….\n<\/p><\/blockquote>\n
\t      Clause 6 provided:\n<\/p><\/blockquote>\n
\t\t “That\tin carrying out the objects  of\t the
\n\t      trust  the  trustees shall keep  in  mind\t and
\n\t      abide by the following directions:-\n<\/p><\/blockquote>\n
\t\t    (i)\t The  payment of the  debts  of\t the
\n\t      author as detailed in Schedule ‘A’ referred to
\n\t      above  shall receive the topmost priority\t and
\n\t      the trustees shall not spend any money out  of
\n\t      the trust property or its income
\n\t      687<\/span>
\n\t      in  any direction till they have paid off\t all
\n\t      the  debts of the author, provided  always  if
\n\t      the trustees are unable to pay off the  debts,
\n\t      out  of  the income i.e.\tdividends,   bonuses
\n\t      etc.  of\tthe shares within a  period  of\t ten
\n\t      years they shall be entitled to sell the\tsame
\n\t      or part of it and thus pay off the debts\tthat
\n\t      may be due at that time.\n<\/p><\/blockquote>\n
\t      (ii)  After debts are discharged the  trustees
\n\t      shall spend
\n\t\t\t  the income of the trust  property.
\n\t      remaining in their hands after full  discharge
\n\t      of  the  debts,  on  the\tmaintenance  of\t the
\n\t      children and grand children of the author\t and
\n\t      the  remaining 20% on all or any of the  other
\n\t      objects of the trust as the
\n\t      Trustees may think best.\n<\/p><\/blockquote>\n
\t      (iii)  …………<\/p><\/blockquote>\n
    The\t respondent claimed before the\tIncome-tax  Officer,
\nEward.\tAmritsar that the dividend received by the  trustees
\nin  respect of 300 shares of the Simbhaoli Sugar  Mills\t was
\nthe income of the Trust and that he had no concern with that
\nincome\tas  he\thad “divested  himself\tirrevocably  of\t the
\nownership of the shares” and that in any event Rs.  19,856\/-
\nbeing  the  amount due as interest to R. B. Seth  Jessa\t Ram
\nFateh Chand should be allowed as a permissible deduction  in
\ncomputing  the net income from dividend of the shares.\t The
\nIncome-tax   Officer   rejected\t the  contentions   of\t the
\nrespondent,  holding  that  the\t Trust\twas  a\t “fictitious
\ntransaction”.\tThe  Appellate Assistant  Commissioner\theld
\nthat the respondent had not “irrevocably transferred the 300
\nshares of the Simbhaoli Sugar Mills” and therefore by virtue
\nof  s. 16(1)(c) proviso one the respondent could not  escape
\nliability to pay tax on the dividend from the share.
\n    The\t respondent  appealed to  the  Income-tax  Appellate
\nTribunal.  but\twithout\t success.  At the  instance  of\t the
\nrespondent the Tribunal drew up a statement of the case\t and
\nreferred  the  following  questions to\tthe  High  Court  at
\nChandigarh:\n<\/p>\n
\t\t “(1)  Whether the dividend  income  of\t 300
\n\t      shares  of the Simbhaoli Sugar Mills,  Private
\n\t      Ltd. transferred by the assessee to S. Raghbir
\n\t      Singh  Trust  was the income of  the  assessee
\n\t      liable to tax?\n<\/p><\/blockquote>\n
\t      (2)Whether the assessee was entitled to  claim
\n\t      deduction of Rs. 19,856\/- paid as interest  to
\n\t      R.B. Seth Jessa Ram Fateh Chand against the
\n\t      dividend income of the aforesaid 300 shares?”\n<\/p><\/blockquote>\n
The  High Court answered the first question in the  negative
\nand  declined to answer the second question.   With  special
\nleave.\tthe Commissioner of Income-tax has appealed to\tthis
\nCourt.\n<\/p>\n
    Section 2 sub-s. (15) defines “total income” as  meaning
\ntotal  amount  of income, profits and gains referred  to  in
\nsub-s. (1) of s. 4
\n688<\/span>
\ncomputed in the manner laid down in the Act.  Section 16  of
\nthe Income-tax Act enumerates the exemptions and  exclusions
\nadmissible  in\tthe computation of total income\t in  certain
\nspecified cases. The material part of cl. (c) of sub-s.\t (1)
\nof s. 16 is as follows:\n<\/p>\n
\t      “In   computing  the  total  income   of\t the
\n\t      assessee–\n<\/p><\/blockquote>\n
\t\t    (c) all income arising to any person  by
\n\t      virtue of a settlement or disposition  whether
\n\t      revocable or not, and whether effected  before
\n\t      or  after\t the  commencement  of\tthe   Indian
\n\t      Income-tax  (Amendment)  Act,  1939  (VII\t  of
\n\t      1939),  from assets remaining the property  of
\n\t      the settlor or disponer, shall be deemed to be
\n\t      income  of  the settlor or disponer,  and\t all
\n\t      income  arising to any person by virtue  of  a
\n\t      revocable\t transfer of assets shall be  deemed
\n\t      to be income of the transferor:
\n\t\t    Provided  that for the purposes of\tthis
\n\t      clause  a settlement, disposition or  transfer
\n\t      shall be deemed to be revocable if it contains
\n\t      any  provision for the retransfer directly  or
\n\t      indirectly  of  the income or  assets  to\t the
\n\t      settlor, disponer or transferor, or in any way
\n\t      gives  the settler, disponer or  transferor  a
\n\t      right to reassume power directly or indirectly
\n\t      over the income or assets:\n<\/p><\/blockquote>\n
\t\t     Provided  further that  the  expression
\n\t      ‘settlement  or  disposition’  shall  for\t the
\n\t      purposes\t of   this   clause   include\t any
\n\t      disposition,  trust,  covenant,  agreement  or
\n\t      arrangement,  and the expression\t‘settlor  or
\n\t      disponer’\t in  relation  to  a  settlement  or
\n\t      disposition  shall include any person by\twhom
\n\t      the settlement or disposition was made:
\n\t\t    Provided further that this clause  shall
\n\t      not apply to any income arising to any  person
\n\t      by virtue of a settlement or disposition which
\n\t      is  not revocable for a period  exceeding\t six
\n\t      years or during the lifetime of the person and
\n\t      from  which  income the  settlor\tor  disponer
\n\t      derives no direct or indirect benefit but that
\n\t      the settlor shall be liable to be assessed. on
\n\t      the  said\t income\t as and when  the  power  to
\n\t      revoke arises to him.”\n<\/p><\/blockquote>\n
Clause (c) was intended, while seeking to protect a  genuine
\nsettlement  by\twhich  the tax-payer intends  to  part\twith
\ncontrol over property and its income. to circumvent attempts
\nmade by him to reduce his liability to pay income-tax by the
\nexpedient  of  so arranging a settlement or  disposition  of
\nproperty  that\tthe income does not accrue to  him,  but  he
\nreserves a power over or interest in the property settled or
\ndisposed of, or in the income thereof. By cl.\n<\/p>\n
689<\/span><\/p>\n
c)   income arising to any person by virtue of a  settlement
\nor  disposition\t whether revocable or not is  deemed  to  be
\nincome\tof the settlor or disponer if the assets remain\t the
\nproperty of the latter.\t Again income arising to any  person
\nby virtue of a revocable transfer of assets is deemed to  be
\nthe income of the transferor.  The first proviso then  deems
\na  settlement  statutorily  revocable, if  it  contains\t any
\nprovision  for\tretransfer  directly or\t indirectly  of\t the
\nincome or assets settled, to the settlor, or where it  gives
\nto  the\t settlor  a  right to  reassume\t power\tdirectly  or
\nindirectly over the income or assets.  By the second proviso
\nthe  expression\t “settlement  or  disposition”\tincludes   a
\ndisposition,  trust, covenant, agreement or arrangement\t the
\nLegislature  has  thereby sought to bring  within  the\tnet,
\ntransactions  similar  to  though not  strictly\t within\t the
\ndescription  of\t settlements and  dispositions.\t  The  third
\nproviso\t carves\t out  from  the\t amplitude  of\tcl.  (c)  as
\nexpounded  by  the  first and  the  second  provisos  income
\narising\t to  any  person  from a  settlement  which  is\t not
\nrevocable  for\ta period exceeding six years or\t during\t the
\nlifetime  of  the person and from which income\tthe  settlor
\nderives no benefit direct or indirect.
\nIt was observed in a recent judgment of this Court:  Commis-
\nsioner\t of   Income-tax,   Bihar   and\t  Orissa   v.\tRani
\nBhuwanesliwari Kuer(1) that:\n<\/p>\n
“By   the  first  proviso,  settlements,   dispositions\t  or
\ntransfers  of  the character described therein,\t are  deemed
\nrevocable  for\tthe purpose of the  principal  clause.\t The
\nfunction of proviso I and proviso 2 is plainly\texplanatory.
\nThe  second  proviso  in  terms\t says  that  the  expression
\nsettlement  or disposition” is to include  any\tdisposition,
\ntrust,\t covenant,   agreement\tor  arrangement,   and\t the
\nexpression “settlor or disponer” is to include any person by
\nwhom the settlement or disposition was made.  Similarly\t the
\nfirst  proviso\tstates\tthat  settlements,  dispositions  or
\ntransfers, if they are of the character described, shall for
\nthe purpose of the principal clause be revocable transfers.”
\nThe terms of s. 16(1)(c) first proviso are reasonably plain.
\nA  settlement  or disposition is deemed\t to  be\t statutorily
\nrevocable if there is a provision therein for retransfer  of
\nthe  income or assets or which confers a right\tto  reassume
\npower over the income or assets.  The provision may even  be
\nfor  retransfer\t indirectly  or\t for  conferring  power\t  to
\nreassume indirectly over the income or the assets.  But\t the
\nactual retransfer or exercise of the power to reasume is not
\nnecessary;  if\tthere  be a provision  of  the\tnature\tcon-
\ntemplated, the proviso operates.\n<\/p>\n
The terms of the deed may now be examined.  The shares\twere
\nsettled\t upon trust, and four trustees one of whom  was\t the
\nrespondent  were appointed.  Genuineness of the trust is  no
\nlonger
\n(1) 53 I.T.R. 195,202.\n<\/p>\n
690<\/span><\/p>\n
in  dispute.  The direction that the shares are\t to
\nstand  in  the name of the Chairman  for  the  time
\nbeing appears to have been necessitated by s. 33 of
\nthe  Indian  Companies Act,  1913  which  prevented
\nnotice\t of  any  trust,  expressed,   implied\t or
\nconstructive  to be entered on the  register.\tThe
\ndeed  recites  that the shares are to  be  held\t on
\ntrust irrevocably by the trustees for all or any of
\nthe  purposes mentioned therein.  The  purpose\tfor
\nwhich  the  shares  are to be  held  in\t the  first
\ninstance  is to pay off the debt due to\t R.B.  Seth
\nJessa  Ram  Fatch Chand, and it is only\t after\tthe
\ndebt is paid off that the directions in cls. (b) to\n<\/p>\n
(f)  of cl. 2 come into operation. The deed  is\t in
\nterms  expressly irrevocable, but on  that  account
\nthe operation of the first proviso is not excluded.
\nIf  by the direction for application of the  income
\nfor   satisfaction   of\t the  debts  due   by\tthe
\nrespondent, it could be said in law that there is a
\nprovision for retransfer directly or indirectly\t of
\nthe  income  or\t a right to  reassume  directly\t or
\nindirectly  power over the income,  the\t settlement
\nwould  be  deemed  revocable, recital  that  it\t is
\nirrevocable notwithstanding.\n<\/p>\n
    But\t the  income  from  the\t shares\t since\tthe
\nexecution  of the deed of settlement arises to\tthe
\ntrustees  and  it is liable to be applied  for\tthe
\npurposes mentioned in the deed.\t The income has\t to
\nbe  applied  for satisfaction of  debts\t which\tthe
\nsettlor\t was under a obligation to  discharge.\tbut
\nthat  is not to say that there is a  provision\tfor
\nretransfer of the income or assets to the  settlor,
\nor  that  the  settlor is invested  with  power\t to
\nreassume  the income or assets. The assets and\tthe
\nincome\t are   unmistakably  impressed\t with\tthe
\nobligations  arising out of the deed of trust.\tThe
\nsettlor\t it  is true\t obtains benefit  from\tthe
\ntrust\tconsequent   upon   satisfaction   of\this
\nliability, but on that account the first proviso is
\nnot attracted.\n<\/p>\n
    We\tare  unable  to\t accept\t the   argument\t of
\ncounsel\t for  the revenue that by the  use  of\tthe
\nexpression  “indirectly” in the first  proviso\tthe
\nLegislature  sought to bring within the purview\t of
\nel. (c) cases where the settler was under the guise
\nof a trust seeking to discharge his own\t liability.
\nThe proviso contemplates cases in which there is  a
\nprovision  for retransfer of the income\t or  assets
\nand  such provision is for retransfer  directly\t or
\nindirectly.  It also contemplates cases where there
\nis  a  provision  which confers a  right  upon\tthe
\nsettlor to reassume power over the income or assets
\ndirectly  or indirectly.  It is the  provision\tfor
\nretransfer  directly  or indirectly  of\t income\t or
\nassets\tor  for reassumption of power  directly\t or
\nindirectly  over income or assets which brings\tthe
\ncase  within  the first proviso.   Cases  in  which
\nthere is a settlement, but there is no provision in
\nthe settlement for retransfer or right to  reassume
\npower do not fail within the  proviso, even if as a
\nresult\tof  the settlement, the settler\t obtains  a
\nbenefit.\n<\/p>\n
    It\thas been held in two cases decided  by\tthe
\nHigh  Court  of\t Bombay\t that  a  person  under\t an
\nobligation arising out of his status
\n691<\/span>
\nmay execute a trust to discharge his own obligation
\nwithout\t attracting the operation of  s.  15(1)(c).
\nIn  Ramji Keshavji v. Commissioner  of\tIncome-tax,
\nBombay(1)  under  a consent  decree.  the  assessee
\nexecuted   a  deed  of\ttrust\tconveying   certain
\nproperties  for\t the benefit of his  wife.  to\tthe
\ntrustees.   The deed provided that the\tnet  income
\nfrom the properties shall be paid to the assessee’s
\nwife  during  her  lifetime  and  that\tshe   shall
\nmaintain  her minor children by the  assessee  anal
\n“run the household”.  It was held by the High Court
\nthat the income derived from the trust property and
\npayable
\n    to\tthe  assessee’s wife  during  her  lifetime
\ncould  not be deemed to be the\tassessee’s  income,
\nfor  the direction in the deed did not amount to  a
\nprovision for retransfer of the income or assets or
\nfor  reassumption of power directly  or\t indirectly
\nover  income  or assets within the meaning  of\tthe
\nfirst proviso to s. 16(1)(c). In D.R. Shahapure\t v.
\nCommissioner of Income-tax, Bombay(2) the  assessee
\nwith the object of making a provision for his  wife
\nmade  an  entry in his business\t books\tof  account
\ncrediting  Rs. 20,000\/-, and endorsed  against\tthe
\nentry.\t“The  capital supplied to you  will  remain
\nentirely  mine but you will get the income over\t it
\nup to the end of your life. This capital I will not
\ntake back up to the end of your life but I will\t do
\nbusiness  for you on this capital and see that\tyou
\nget Rs. 600 per annum for you”.\t No specific assets
\nwere set apart to. meet the sum of Rs. 20,000\/- and
\nthere  were  no\t other entries in  the\tbooks  with
\nregard\tto it.\tThe High Court held that the  entry
\nwas  an\t irrevocable  covenant to  pay\tthe  income
\naccruing  on Rs. 20,000\/- with a guarantee that\t it
\nshall be Rs. 600 a year, and therefore the case was
\ncovered by the third proviso to s. 16(1) (c) of the
\nAct and the income which was paid to the wife under
\nthe  covenant could not be deemed to be the  income
\nof  the\t assessee  under  the  first  part  of\t s.
\n16(1)(c).   In our view these cases were  correctly
\ndecided.\n<\/p>\n
The appeals fail and are dismissed with costs.\tOne
\nhearing
\nfee.\n<\/p>\n
Appeals dismissed.\n<\/p>\n
(1)  (1945)13  I.T.R.105.\t\t   (2)\t 14
\nI.T.R. 781
\n692<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Commissioner Of Income-Tax, … vs Raghbir Singh on 9 April, 1965 Equivalent citations: 1966 AIR 18, 1965 SCR (3) 684 Author: S C. Bench: Shah, J.C. PETITIONER: COMMISSIONER OF INCOME-TAX, PUNJAB, JAMMU &KASHMIR, HIMACHA Vs. RESPONDENT: RAGHBIR SINGH DATE OF JUDGMENT: 09\/04\/1965 BENCH: SHAH, J.C. BENCH: SHAH, J.C. SUBBARAO, K. SIKRI, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-233300","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nCommissioner Of Income-Tax, ... vs Raghbir Singh on 9 April, 1965 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-raghbir-singh-on-9-april-1965\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Commissioner Of Income-Tax, ... vs Raghbir Singh on 9 April, 1965 - 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