LexJYOTENDRASINHJI versus S.L. TRIPATHI AND ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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JYOTENDRASINHJJ
v.
S.l. TRIPATHI AND ORS.
APRIL 2, 1993
,.,.
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[B.P. JEEVAN REDDY AND N. VENKATACHALA, JJ.)
Constitution of India, I950: Altic/es 136, 226 read with provisions in
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Chapter XIX-A. Income Tax Act 1961-Settlement Commission's order-In-
terference or judicial review under Arlicle 226 or 136-Scop,,_.<;ommission 's
c interpretation of settlement deeds-Effect of
Income Tax Act, 196I: Sections 61, 63, 164(1), 166-U.S. settlement
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deed/trnst deed-Whether discretionary-Revocability under section 6J-
Sett/or's power under U.S. deed-Extent of-Revenue's. option to tax income
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froni a discretionary trnst in the hands of trnstees or beneficiaries.
Income Tax Act, 1961: Sections 5, 63, 164( I T-f.J.K. settlement
deed/tn1st deed--lncome declared and .shown in Tax returns by sett/or and
after his death by his son--Taxability of-Payment of taxes in UK or USA on
Income from settlement deeds-{f proved, not taxable in India.
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Imerpretation of Documenr-u.SA. or U.K. settlement deeds or trnst
deeds-Constrnction_,'Transfer': "family members". "descendants of the Jami-
ly members''-i'ffeaning of-Income derived from such trnsts whether taxable -
in India.
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The apl"'llant's father executed on 1.1.1964, three deeds of settle-
ments (trust deeds) in the United States of America. The terms in them
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all were identical. The object of these trusts was to provide for the educa-
tion, maintenance and up-keep of the members of the settlor's family and
their descendants. He also executed two settlements in U.K. with the very
G same object.
The settlor (appellant's father) was iiling returns of his income in
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India including therein whole of the income arising from the trusts. For
the assessment years 1964-65 to 1969-70, he iiled the returns. Since he died
on 22-8-1969, i.e. in the middle of the accounting year (relevant to the
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assessment year 1970-71), two returns \Vere fiJed, one up to the date of his
938
JYOTENDRASINHJJ v. S.J. TRIPA THI
939
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death and the other from the date of bis death to the end of the accounting A
year, by bis eldest son, the appellant, including the whole of the income
from the trusts.
The appellant filed appeals against the assessment orders pertain·
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ing to the assessment years 1965-66 and 1966-67 contending that. the
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income from U.S. trusts was not taxable in India either in the hands of
settlor or in his hands and that the inclusion of the said income in the
returns by the settlor and by the appellant was a mistake.
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The appellant preferred revisions against other assessment orders,
where appeal was barred, taking the plea of non-taxability with respect to c
the income from U.K. trusts and from the U.S. trusts.
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The Appellate Assistant Commissioner allowed the appeals.
The Revenue's appeals to the Tribunal were allowed holding that the
A.A.c. acted contrary to Rule 46(2) of the Income Tax Rules in admitting the D
additional grounds and in looking into new material. The Tribunal remitted
the appeals back to A.A.C. At that stage the appellant approached the
settlement commission under Chapter XIX(A) of the Income Tax Act, 1961.
The Settlement Commission went into all the aspects of the matter
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and computed the taxable income of appellant's father and his income for E
the assessment years 1964-65 to 1970-71 and 1970-71 to 1982-83. It
directed the l.T.O. to compute the total income for each of the said
assessment years accordingly and raise demand for the tax due.
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The appellant preferred two sets of appeals before this Court
against the two orders .of the Settlement Commission. C.A.s. ·1301-07 of F
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1991 related to the assessment years 1964-65 to 1970- 71 and C.As.1288-
1300of1991 related to the assessment years 1970-71to1982-83.
The_ appellant contended that the settlement Commission erred in
law in holding that the U.S. trusts were revocable trusts within the mean- G
ing of Section 63 of the Act; that for attracting Section 63, the deed of
transfer must give the transferor a right to re-transfer directly or indirect•
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ly whole or any part of the income or assets to the transferor or it mus\.
give him a right to re-assume power directly or indirectly over the whole
or any part of income or assets; that in the present case such power was
not given to the transferor; that U.S. trusts were discretionary trusts and H
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SUPREME COURT REPORTS
(1993] 2 S.C.R.
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A therefore the assessment could Excerpt shown. Read the full judgment & AI analysis in Lexace.