Important Point
Where contributions to trust were made on behalf of minors as nominees but trust was not created with the permission of a principal civil court of original jurisdiction, by or on behalf of a minor, the trust is not valid since the terms of Section 7 of the Trust Act are violated.

Judgment

Bharucha, J.-These appeals are directed against the judgment and order of a Division Bench of the High Court of Kerala. The High Court answered in the negative and in favour of the Revenue the following question:

“Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that a valid trust came into exist­ence in pursuance of the document dated 17.8.1971 and whether the Tribunal was justified in holding that the assessment for the years 1973-74 and 1974-75 on the trustees had to be made in accordance with the provisions of Section 161 of the Income Tax Act 1961?”

The question aforementioned relates to the Assessment Years 1973-74 and 1974-75. (Similar question for subsequent years were answered similarly and are the subject matter of the connected appeals).

2. The facts, briefly stated, are that a trust deed was executed on 17th August, 1971. It records this :

“.......And whereas the beneficiaries, viz., Mary Varghese on behalf of her minor daughters Laizamma Var­ghese and Rasalin Varghese...... has transferred and assigned to the trustees upon trust the sums referred to in clause 17 against their respective names...... Whereas T.J. Joseph and his mother-in-law have transferred and assigned to the trustees upon trust the sum of Rs. 50,000/- (Rupees fifty thousand only) as nominees of minor T.A. Joseph......... Whereas P.J. Joseph had his brothers have transferred and assigned to the trustees upon trust the sum of Rs. 25,000/- (Rupees twenty five thousand only) as nominees of T.S. Var­ghese........ Whereas Mary Varghese has transferred and assigned to the trustees upon trust the sums of Rs. 29,000/- (Rupees twenty nine thousand only) and Rs. 21,000/- (Rupees twenty one thousand only) respectively as nominees of minors T.S. Var­ghese and Daisy..... Whereas Mrs. Ammini Abraham has transferred and assigned to the trustees upon trust the sum of Rs. 54,000/- (Rupees fifty four thousand only) and Rs. 3,000/- (Rupees three thousand only) respectively as nominees of minors T.S. Laly and T.S. Daisy...... Whereas all such transfers as aforesaid were made to the Trustees as nominees of the respective beneficiaries and it was agreed prior to the date of such transfers that the trustees should execute such declarations of trust.”

3. The body of the trust deed states, “The trustees hereby accept this trust and acknowledge the receipt of Rs. 3 lacs receiv­ed from each of the benficiaries as under which they shall hold for and on behalf of the Trust :

1. Mary Varghese Rs. 6,000/-

2. Laisamma Varghese Rs. 33,000/-

3. Rosalin Varghese Rs. 33,000/-

4. Thankamma Baby Rs. 6,000/-

5. Daisy Scaria Rs. 54,000/-

6. Laly Scaria Rs. 54,000/-

7. Davis alias T.S.                        Varghese Rs. 54,000/-

8. Ammini Abraham Rs. 6,000/-

9. T.A. George Rs. 54,000/-

Total Rs. 3,00,000/-

(Emphasis supplied)

4. The Income Tax Officer rejected the claim that the assessee should be assessed as a representative assessee within the meaning of Section 161(1) of the Income Tax Act because he found that the trust created by the trust deed was invalid. (Similar assessments were made for subsequent years). The Appellate Assistant Commissioner, allowed the assessee’s appeal and his order was confirmed by the Income Tax Appellate Tribunal. The Tribunal referred to letters and other doucments not mentioned in the Trust Deed to reach the conclusion that the donations to the trust had not been made by minors.

5. From out of the order of the Tribunal, the question aforementioned was referred to the High Court. The High Court, relying upon the provisions of the trust deed which we have quoted, concluded that all contributions to the trust were made by or on behal