CHANDURKAR, J. - (1.)THE assessee D. M. Netarwala (hereinafter referred to as "Netarwala") had along with his father-in-law Bharucha (hereinafter referred to as "Bharucha") executed a trust deed, the subject-matter of the trust being securities worth Rs. 50,000, out of which securities worth Rs. 40,000 belonged to the assessee, Netarwala, and Rs. 10,000 to Bharucha. Apart from the two settlors, who also became the trustees, the Imperial Bank of India was also constituted a trustee by the trust deed. According to the recitals in the trust deed, the trustees were to pay the balance of interest, dividend and other income out of the trust funds remaining after all the proper costs, charges and expenses of and incidental to the collection of the income of the trust funds were defrayed, to the child of Netarwala and his wife who was already born on 24th January, 1946. THE trust deed was executed on 24th April, 1946. THE payment to the child was to be made for ten years from the date of the trust deed. A further direction in the trust deed was that if the said child died during the said period of 10 years, then the trustees were to accumulate the net income for the remaining period of ten years from the date of the trust deed. THE trust deed then provided as follows :
"Subject as aforesaid from and after the expiration of the said period of ten years from the date of these presents, in trust to pay the trust funds to Perin Dhunjishaw Netarwala and Dhunjishaw Maneckji Netarwala in equal shares absolutely."

(2.)SOME other contingencies were also provided for in the trust deed such as that if any one of the two persons mentioned above, i.e., Netarwala and his wife was dead at the expiration of the period of ten years, the trust funds were to be given to the survivor and if none of them was alive, then the trust funds were to be paid to the child of Netarwala and his wife or if more than two, to all of them in equal shares. A further provision was made that if there were no children or child of the Netarwalas on the expiration of the said period of ten years, then 1/5th of the trust funds was to be paid to the heirs of Bharucha according to the law of succession and the balance of 4/5ths of the trust funds to the heirs of Netarwala according to the law of succession applicable to Parsis. The trust came to be determined on 24th April, 1956, i.e., in the accounting year relevant for the asst. yr. 1957-58, and the trust funds were divided between the assessee and his wife. During the asst. yr. 1958-59, the securities received by Netarwala and his wife from the trustees were sold by them and each of them deposited a sum of Rs. 25,000 with one Habib Hussein of Liberty Cinema at 9 per cent. per annum. This interest was sought to be brought to tax by the ITO. The interest earned on the deposit made by the wife was sought to be taxed by the ITO in the hands of Netarwala and the ITO included in the income of the assessee interest received from Habib Hussein to the extent of 4/5ths of the money invested from the sale proceeds of the securities.
In appeal filed by the assessee, the AAC took the view that the trust deed itself declared that Netarwala's wife was entitled to receive half of whole of the trust funds after the termination of the trust and since the trust funds were contributed to the extent of Rs. 40,000 by Netarwala, the words of s. 16(3)(a)(iii) would cover such a transfer. He held that the distribution of the trust funds by the trustees in 1956 was only in pursuance of the terms of the trust declaration made by Netarwala himself. He further came to a finding that the consideration sought to be made out for the transaction by Netarwala was not, in his opinion, adequate consideration and, therefore, the ITO was justified in including the income of the wife under s. 16(3)(a)(iii) of the Indian IT Act, 1922. In an appeal filed by the assessee, the Tribunal held that s. 16(3) covers cases of a transfer to a person or an association for the benefit of the wife of the transferor and the assessee's case clearly constituted a transfer to an AOP for the benefit of the wife of the assessee. The Tribunal held that the transfer in favour of the wife was not a contingent transfer and even if there was a contingent transfer, the same would be covered by s. 16(3) of the Act. The Tribunal, therefore, upheld the addition of 4/5ths of the interest income from the trust funds in the hands of the assessee. The assessee was aggrieved by the order of the Tribunal and the following question has, therefore, been referred at his instance to this Court under s. 66(1) of the Indian IT Act, 1922 :

"Whether, on the facts and in the circumstances of the case, it was rightly held that 4/5ths of the interest income from the trust fund was assessable in the hands of the assessee ?"

Mr. Khanna appearing on behalf of the assessee has vehemently contended that the sum of Rs. 25,000 which the assessee's wife received after the expiry of 10 years as stipulated in the trust deed was not received by her by virtue of any transfer made by her husband. According to him, the moment Netarwala had created a trust in respect of the amount of Rs. 40,000, he ceased to have any power of disposal of the said amount and, if at all, the amount was received by Netarwala's wife from the trustees constituted by the settlors including Netarwala's father-in-law, Bharucha. The argument appears to be that Netarwala's wife received the amount in her own right and it has been received by her from an association of persons and not from her husband Netarwala and if at all any provision was attracted, it was the one made under s. 16(3)(b) of the Act and not s. 16(3) (a). For the proposition that the assessee's wife got moneys in her own right, Mr. Khanna has placed reliance on the decision of this Court in Behramji Sorabji Lalkaka vs. CIT (1948) 16 ITR 301.

(3.)IN order to appreciate the contentions raised by Mr. Khanna, it would be necessary to refer to the provisions of s. 16(3)(a) and (b) as they were in force at the material time. These provisions read as follows :
"(3) IN computing the total income of any individual for the purpose of assessment, there shall be included-- (a) so much of the income of a wife or minor child of such individual as arises, directly or indirectly-- (i) from the membership of the wife in a firm of which her husband is a partner ;... (iii) from assets transferred directly or indirectly to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart ; ... (b) so much of the income of any person or AOP as arises from assets transferred otherwise than for adequate consideration to the person or association by such individual for the benefit of his wife or a minor child or both."

Now, it is not the case of the Revenue that when the income earned by Netarwala's wife from the deposit made with Habib Hussein was sought to be clubbed with the income of Netarwala, it was sought to be done under the provisions of s. 16(3)(b) of the Act. It is also difficult to see how any reference to s. 16(3)(b) of the Act, so far as the facts of the present case are concerned, would at all be relevant. Sec. 16(3)(b) is intended for only a certain category of cases and under that provision an assessee can be taxed only on the income from a trust fund created for the benefit of his wife or a minor child or both, if in the relevant year of account the wife or the minor child or both have derived some benefits under the trust deed. It may be that cl. (b) of sub-s. (3) would have become relevant for determining whether the income from the trust funds during the period of ten years during which the trust was in existence, could be included as the part of the income of the trustees out of whom two were the settlors. But since the period of ten years as provided in the trust deed has expired and the trust had worked itself out, the provisions of cl. (b) of sub-s. (3) would be completely out of the way.