Hidayatullah, J. - (1.) This judgment governs the disposal of Civil Appeals Nos. 134 to 137 of 1959. They have been filed by four assesses with special leave, and arise out of similar facts, and it is not necessary to refer to more than one case to consider the point in question.
(2.) The assessment year under consideration is 1952-53, and the previous year, the Calendar year, 1951. In that year, Mr. Tulsidas Kilachand, one of the four appellants, made a declaration of trust in favour of his wife, a portion of which may be quoted here: "......... I, Tulsidas Kilachand ........ hereby declare that I hold 244 shares of Kesar Corporation Ltd. and 120 shares of Kilachand Devchand and Co., Ltd ............... upon trust to pay the income thereof to my wife Vimal for a period of seven years from the date hereof or her death (whichever event may be earlier) and I hereby declare that this trust shall not be revocable." In the year of account, a sum of Rs. 30,404 was received as dividend income on those shares, and the assessee contended that this income, after being grossed up, was not liable to be included in his total income, in view of the third proviso to S. 16(1)(c) of the Indian Income-tax Act. The Income-tax Officer did not accept this contention, and though the assessment order is not before us, we gather from the statement of the case that the reason he gave was that the income had accrued to or had arisen in the hands of Mr. Tulsidas Kilachand and had been paid by him to his wife. The Income-tax Officer held that the words of the proviso "income arising to any person by virtue of a settlement or disposition" did not apply to this income.
(3.) On appeal, the Appellate Assistant Commissioner held that the case was governed by S. 16(3)(b), and need not be considered under the third proviso to S. 16(1)(c) of the Act. It appears to have been conceded before him that if the former provision applied, the proviso would not save the income from being assessed in the hands of Mr. Tulsidas Kilachand. The appeal was dismissed.;