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Showing contexts for: void trust in Cit vs Dynavision Ltd. on 31 December, 2002Matching Fragments
2. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that with the transfer of Rs. 50 lakhs by the assessee- company to the Dynavision Dealers Welfare Trust a valid trust came into existence on 26-11-1984 and that in this regard no written trust deed is necessary, in the context of the Income Tax Appellate Tribunal holding that the Dynavision Dealers Welfare Trust was ab initio void and non est, in law, when it is created on 27-11-1984 with no corpus fund and no recognised instrument of trust deed ?"
7. The submission of the learned counsel for the revenue that since the earlier trust deed dated 27-11-1984 has not come into force, there is no trust at all is not acceptable as it is well settled that even an oral trust is permissible in the case of creation of a trust. In Fazlhussein v. Mahomedally AIR 1943 Bom 366 a Division Bench of the Bombay High Court has held that where the original trust deed is void, the conduct of the trustees in subsequently admitting that he is holding the property on specific trust would establish a valid trust on those terms. In Radhasoami Satsang v. CIT (1992) 193 ITR 321 the Supreme Court, after noticing the decision of the privy council in the case of All India Spinner' Association v. CIT (1944) 12 ITR 482, held that where a property was given to the Satguru which was intended for the common purpose of furthering the purpose of the institution, the property was subject to a legal liability of being used for the religious and charitable purposes of the Satsang. The Supreme Court in CIT v. Tollygunge Club Ltd. (1977) 107 ITR 776 has held that a trust may be created by any language sufficient to show the intention and no technical words are necessary and it may even be created by the use of the words which are primarily the words of condition. The Supreme Court further held that the requisites which must be satisfied are that there should be purposes independent of the donee to which the subject matter of the gift is required to be applied and an obligation on the donee to satisfy those purposes. We are, therefore, of the opinion that a formal deed is not necessary to create a trust and to create a legal obligation to be attached to the property transferred to the trustees.
9. The question was framed as if the Appellate Tribunal has held that the Dynavision Dealers' Welfare Trust was ab initio void and non est in the eye of law when it was created on 27-11-1984 with no corpus fund and there was no recognised instrument of trust deed. However, we find that the Appellate Tribunal has not recorded such a finding, but the Tribunal has held that the trust deed dated 27-11-1984 was not a valid document and it had not brought into a valid trust which is far different from saying that the trust was void ab initio and non est in the eye of law. Accordingly, we reframe the second question of law as under :
15. The next submission of the learned counsel for the revenue is that the trust deed was a void document and the amount was contributed not as a trader, but as an owner. He referred to the objects of the trust and submitted that the beneficiaries are uncertain and the objects of the trust are also vague in nature. Learned counsel also referred to clauses 19 and 20 of the deed of trust and submitted that under clauses 19 and 20 of the deed; the trust shall stand determined on the expiry of the last lineal descendants of past or present stockists or dealers of the assessee-company and the assessee-company has reserved a right to modify or alter the deed of trust. He, therefore, submitted that since the power to modify the deed of trust is vested with the assessee, the deed of trust is vested with the assessee, the deed of trust has to fail and the money contributed by the assessee to the trust is not an expenditure.