Sabyasachi Mukharji, J. - (1.) In this reference under Section 27(3) of the W.T. Act, 1957, as directed by this court, the following three questions have been referred to this court : "(1) Whether, on the facts and in the circumstances of the case, and in view of the facts that the deed of declaration of trust was executed on 8th July, 1959, the Tribunal was justified in holding that the transfer of 300 shares of the assessee in M/s. Indra Singh & Sons Pvt. Ltd. in favour of Sardar Baldev Singh Charitable Trust became effective on the 18th February, 1959, prior to the date of valuation for the assessment year 1959-60 and not from 8th July, 1959, being the date of execution of the said deed ? (2) Whether, on the facts and in the circumstances of the case, the assessee was competent to create charitable trust revokable by him after 10 years and whether the trust purported to be created was a valid trust in law ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not including the value of 300 shares of the assessee in M/s. Indra Singh & Sons Pvt. Ltd. transferred in favour of Sardar Baldev Singh Charitable Trust in the assessee's wealth for the assessment year 1959-60?"
(2.) In order to appreciate the questions it will be necessary to refer to certain facts. The assessment year involved is 1959-60, with its date of valuation being 31st March, 1959. The assessee, Sardar Surjit Singh, had 850 shares in M/s, Indra Singh & Sons Pvt. Ltd. He transferred 50 shares to Smt. Baljit Kaur by a deed executed on the 10th January, 1959, and 300 shares to Sardar Baldev Singh Charitable Trust on the 27th February, 1959. By means of a letter dated 20th January, 1959, the assessee wrote to the trustees of the trust that as discussed with them about his decision to set up a public charitable trust and/or a public religious trust and in view of their kind acceptance of the office of trustees to the trust, he was anxious to execute the transfer of sufficient amount of security to the trust and offered "immediate transfer to you and delivery of possession to you of 300 fully paid up equity shares of Rs. 1,000 each at par in the share capital of M/s. Indra Singh & Sons Pvt. Ltd." He requested the trustees to consider his request and offer and communicate to him the result of the decision as soon as possible. The trustees held a meeting on the 6th of February, 1959, and accepted the said offer. The trustees communicated the result of the meeting to the assessee on the 9th February, 1959, and the assessee wrote back to them on 10th of February, 1959, that he was anxious to give effect to his desire and the decision to set up a public charitable and/or religious trust as well as to transfer the 300 shares that he had offered to them and also tendered the 3 separate instruments of transfer, each of 100 shares, together with the corresponding certificates of shares in original and requested the trustees to accept the offer and tender. The trustees received this letter and three instruments of transfer duly stamped, signed and witnessed, for the transfer of 300 fully paid-up equity shares in the share capital of the company for the purpose of and for and on behalf of the trust of which they had agreed with the assessee to serve as trustees. A meeting of the trustees was held on 27th February, 1959, for the consideration of the transfer of the shares and the transfer was approved. The deed of declaration of the trust was, however, executed on 8th of July, 1959.
(3.) Our attention was drawn to a copy of the said deed of trust which, inter alia, provided as follows : "19. The trustee or trustees for the time being under these presents, shall be respectively chargeable only for such moneys as they shall respectively actually receive notwithstanding their respectively signing any receipt or receipts for the sake of conformity and shall be answerable and accountable for his or their own acts, receipts, neglects or defaults and not for those of the others or other of them or for any banker or other person with whom or into whose hands any trust moneys may be deposited or come for any loss unless the same shall happen through their or his own wilful default respectively. 20. It is hereby expressly declared that this Trust shall operate for a period of 10 (ten) full calendar years, with effect from the date of the tender and offer and delivery of possession by the Truster of the instrument or instruments of transfer of the said 300 shares together with the corresponding certificates of the 300 shares to the Trustees, namely, the 10th day of February, 1959, expiring on or about the 9th day of February, 1969, and the Truster shall have a right to revoke the transfer and settlement of any part or all the said 300 shares to the Trustees hereto provided always that the right of revocation and recall shall hereto be exercised by the Truster before the expiry of the last mentioned year of the said period of 10 years by serving full clear 6 months notice expiring with the last day of the said period of 10 years on the Trustees as then may be functioning as such and unless it is so done, this Trust shall continue the transfer and settlement of the said 300 shares to this trust for the purpose of this Trust shall continue and the entirety of the Trust Fund as may be then have been built up with the yields or produce or income, profits or gains earned from time to time by and of and/ or with the help of the said 300 shares shall continue to merge in the Trust Fund, vest in the Trustees and to be utilised only and solely for the purpose of this Trust. In the event of the Truster recalling any part and/or all the said 300 shares or so many of them as may by these be available to the Trust from this Trust and recalling this Trust in the manner hereinbefore provided for, the entire balance of the accretions to the Trust Fund initially made up of the said 300 shares together with the balance of the further properties, movable and/or immovable acquired by or with the help of the said Trust Fund, shall nevertheless continue to vest in and belong to this Trust, and be deemed to compose the Trust Fund, to be utilised, appropriated, disposed and administered only and solely for the public charitable and/or public religious objects of this Trust in accordance with the terms of this Trust and/or any further rules as may from time to time and until then may have been made by the Trustees administering this Trust until then. Truster shall on the occasion of any such recall or revocation not to be entitled to claim, own or possess any further accretion to or income or profit yielded, earned or produced by and/or any assets acquired with the help of or by the said 300 shares (three hundred shares) and he shall be entitled to recall and revoke his entrustment of, and the corpus of only one (1) up to the said maximum 300 (three hundred) shares alone...... ";