- (1.) This appeal by certificate arises upon an income tax reference, the relevant assessment years being Assessment Years 1965-66, 1966-67, 1967-68, 1968-69 and 1969-70. The High court answered the questions placed before it in the affirmative, i. e. in favour of the assessee, relying upon its judgment in the assessee's own case for the Assessment Years 1963-64, 1964-65, 1966-67. The question before the High court was this: "Whether on the facts and circumstance 5 of the case the tribunal was right in holding that the income of the trust was not includible in the hands of the settlor under the provision of Section 64 (v) of the income Tax Act. "
(2.) The assessee, an individual, had executed two deeds of trust and a supplementary deed. the cumulative effect of which was that the income from the trusts was to be accumulated until the attainment of majority by his three sons. The cumulative income was then to be divided into three equal shares and the respective l/3rd share of each son was to he paid to him. The question was whether the income from the trusts could be included in the total income of the assessee under the provisions of Section 64 (v) of the income Tax Act, as it then read. Section 64 (v) , so far as It is relevant for our purpose, read thus: "64.In computing the total income of any individual, there shall be included all such income as arises directly or indirectly- (v) to any person or association of persons from assets transferred otherwise than for adequate compensation to the person or association of persons by such individual, to the extent to which the income from such assets is for the immediate or deferred benefit of his or her spouse or minor child (not being a married daughter) or both. "
(3.) In the judgment in the assessee's own case (Addl. commissioner OF INCOME TAX v. M. R. Dosh, the gujarat High court held, on a construction of Section 64 (v) , that the income from the transfer of assets can be included in the income of the transferor provided that, under the transfer, the benefit from such assets was immediately available or was deferred for the spouse or minor children of the settlor. In other words, the mischief of tax evasion by assessees by transfer of their assets, such as by settlement or by trust, so as to make the income of such transferred assets available to their spouses or minor children without subjecting the same to tax in the hands of the settlors, was sought to be avoided by providing that such income would be includible in the hands of the settlors provided that the benefit from the income of such assets was either immediately available to or was deferred for the benefit of their spouses or minor children. If the child for whom the benefit was provided was to receive it on attaining majority, the provision contained in clause (v) was not attracted on the plain reading of clause (v) itself, because, otherwise, the legislature would not have expressed itself in the manner in which it did. Reliance was placed upon Yogindraprasad N. Mafatlal v. commissioner OF INCOME TAX where the same view was taken.;