Karnataka High Court
Commissioner Of Income-Tax vs D.V. Narasimhan on 5 September, 1991
Equivalent citations: [1992]196ITR499(KAR), [1992]196ITR499(KARN), [1993]66TAXMAN455(KAR)
Author: N. Venkatachala
Bench: N. Venkatachala
JUDGMENT K. Shivashankar Bhat, J.
1. The question referred to us under the provisions of the Income-tax Act, 1961 ("the Act" for short), reads thus :
"On the facts and in the circumstances of the case, was the Appellate Tribunal right in law in cancelling the order passed by the Commissioner of the Income-tax under section 263 ?"
2. The Commissioner of Income-tax invoked the provisions of section 263 and directed the Income-tax Officer to include in the assessment of the assessee, herein, the income derived by a trust since the assessee's minor son was the sole beneficiary of the trust. The commissioner, for this purpose, invoked the provisions of section 64(1)(iii) of the Act read with Explanation 2A. The assessee contended that as per the trust deed, the income of the trust was to be accumulated and to be handed over to the minor son on his attaining majority and, therefore, section 64(1) was not attracted. The Appellate Tribunal has upheld this contention of the assessee. The assessee had pointed out that, under the trust deed, the income had to be accumulated beyond the date of minority and, therefore , it was a case of a deferred benefit for a person who becomes a major subsequently and not a case of deferred benefit for a minor child.
3. This contention of assessee was accepted by the Appellate Tribunal by following the decision of the Bombay High Court in [1977] 109 ITR 602 (Yogindraprasad N. Mafatlal v. CIT).
4. The question is now settled by a decision of this court also which is CIT v. M. D. Veeranarasimhaiha [1988] 174 ITR 435. It was held by this court that since the income had to be accumulated and the minor children had no right to receive that income, nothing had accrued to the minor children and consequently the said income could not be included in their father's income. It was a case of a deferred benefit, not being for a minor child. Accordingly, it was held that section 64(1)(vii) was not applicable. The aforesaid decision directly covers the point. Consequently, the view taken by Appellate Tribunal has to be affirmed.
5. The question referred to us is, accordingly, answered in the affirmative and against the Revenue. References are answered accordingly.