Indian Kanoon - Search engine for Indian Law

2. The facts giving rise to the reference before us briefly are as follows :

In December, 1940, the assessee made an oral trust in respect of securities of the face value of Rs. 5 lakhs. The object of trust was to pay the income arising form the trust properties to a Parsee Hunersala. A deed of trust was executed on 25th August, 1943. Clause 10 of that deed of trust expressly empowered the assessee to revoke the trust either wholly or in part. In the course of the assessment proceedings for 1943-44, the assessee claimed that the income arising from the said trust was exempt under section 4(3)(i) of the Income-tax Act as it then stood. The Income-tax Officer relied upon the provisions of section 16(1)(c) and held that the income arising from the trust properties was liable to be included in the total income of the assessee. The matter ultimately came before this court on a reference at the instance of the Department. The question that arose for consideration by this court was the following :