A. V. BALASUBRAMANYAM, J. M.: These appeals are by Revenue and they pertain to WT assessments for years 1975-76, 1976-77 and 1977-78. dispute is common to all assessments, and, hence were taken up for consolidated hearing. To furnish statement of essential facts: Balchandra D. Garware and Vimlabai Balchandra Garware, husband and wife, had each 33000 equity shares in company Garware Nylons P. Ltd. husband and wife executed separate indenture on 30th March 1970 regarding their respective shares mentioned above. These indentures created trust and first trustees were authors themselves, namely, Balchandra D. Garware and Vimlabai B. Garware. trust, founded by Balchandra D. Garware, is named "Garware Sons Family Trust" and trust created by his wife, Smt. Vimlabai B. Garware, is called "Aba Ine Garware Trust". authors of trust have four sons, Shashikant B. Garware, Chandrakant B. Garware, Ashok B. Garware and Romesh B. Garware. beneficiaries, under both trusts, were HUFs of each one of four sons whose names are furnished just above. Shashikant B. Garware executed two deeds of assignment on 26th March 1975 in favour of company called Romesh B. Garware Investment Company (P) Ltd. trust deeds dt. 30th March 1970, executed by Balchandra D. Garware and Smt. Vimlabai B. Garware, and assignments made by Shashikatn B. Garware on 26th March 1975, are identical in terms and, as such, we may furnish details of one as illustrative of other also. According to Garware Sons Family Trust, net income from shares("Trust Fund", for short) had to be paid by trustees to HUFs of four sons (Shashikant B. Garware, Chandrakant B. Garware, Ashok B. Garware and Romesh B. Garware) in equal shares for period of 25 years from date of trust 30th March 1970 and, on expiry of 25th year, Corpus of Trust Fund should be divided among four sons in equal shares and delivered to them accordingly. Shashikatn B. Garware, as Karta of his branch of joint family, and also as guardian of his three minor daughters, and along with his wife, made assignment on 26th March 1975 in favour of Romesh B. Garware Investment Company (P) Ltd., whereby transfer was made. In effect, it was gift of Corpus of Trust Fund which Shashikant B. Garware HUF should receive at expiry of 25th year. Till then, Shashikant B. Garware HUF was to receive 1/4th of net income from Trust Fund as specified in trust deeds dt. 30th March 1970. On 20th March 1981, trustees (Balchandra D. Garware and Vimlabai B. Garware) affirmed, by means of separate affidavits, assignment, made by Shashikant B. Garware HUF, in favour of Romesh B. Garware Investment Co. (P) Ltd., and further declared that there is no bar placed on trustees to hand over 1/4th share of said beneficiary interest in corpus of fund to assignee, Romesh B. Garware Investment Co. (P) Ltd., after period of 25 years elapses. We may mention here that similar is fact-position in regard to "Aba-Inne Garware Trust". Shashikant B. Garware offered gifts to Gift-tax and taxing authority made what is called protective assessments. In WT assessment of Shashikant B. Garware HUF, beneficial interest in two trusts was being shown as asset till year of assessment 1975- 76. In these three impugned assessments, assessee offered only right to receive 1/4th share in net income from Trust Fund as taxable wealth (inter alia other items of family property with which we are not concerned) showing value at Rs. 2,62,353 as on relevant valuation dates, based u p o n actuarial valuation. WTO did not accept this. In his view assignments (or gifts) made on 16th March, 1975 in favour of Romesh G. Garware Investment Co. (P) Ltd. was bad in sight of law and assessee continued to have same interest as before in Trust Fund and value of such interest was taken at Rs. 12 lakhs in each of assessments. On appeal, by assessee, CWT (A) held that gifts were valid in l w and that Department has no right to challenge it. In view of that conclusion, he directed that beneficial interest of Shashikant B. Garware in two Trust Funds be taken at Rs. 2,63,353, as declared by assessee. In sum, assessee succeeded. Revenue is objecting to deletion of substituted figure of Rs. 12 lakhs, in place of declared valuation of Rs. 2,63,353 by first appellate authority as value of beneficial asset held by assessee in two trusts on material valuation dates. argument of Sri Jetley, ld. Standing counsel, was that legal ownership in Trust Fund lies only with trustees and that assessee could not have made effective transfer of right to receive 1/4th share of Corpus in Trust Fund after term of 25 years to third person without even circumstance of trustees and that neither provisions in Indian Trust Act not terms in trust deeds dt. 30th March 1970 countenance such thing. Elaborating his arguments, he stated that assignments of 26th March 1975, in favour of company, is nothing but attempt at evasion of tax and that such tax-planning should not be recognised by judicial forums in view of nice distinction between tax-planning and avoidance of tax as recently explained by Supreme Court in case of Mc Dowell & Co. Ltd. vs. CTO (1985) 47 CTR (SC) 126: (1985) 154 ITR 148 (SC). Shri Dastur mainly based his argument upon competence of beneficiary to transfer his interest in trust property without even reference to trustee as recognised in s. 58 of Indian Trust Act. It was also stressed that Shashikatnt B. Garware, as Karta of HUF, could validly dispose of family property without even existence of legal necessity or family benefit as this was case of sole surviving coparcener Shashikant B. Garware has no sons and that his powers are not clamped in any way either in Hindu Law or by provisions in trust deeds dt. 30th March 1970. submissions made by either side define following questions for consideration: (1) Whether beneficiary trust can transfer and dispose of his interest in trust property without consent of trustee, and, if, yes, whether it amounts to tax evasion? (2) Whether Shashikant B. Garware, as Karta, could have made valid gift of interest of HUF in corpus of Trust Fund? We proceed to consider these questions and in reference to case-laws cited. We were taken through provisions in trust deeds dt. 30th March 1970. Shashikant B. Garware, HUF has to receive 1/4th share in net income of Trust Fund for term of 25 years and, thereafter, said HUF should get, absolutely 1/4th share in Corpus of Trust Fund. first trustees are authors themselves. other terms in two deeds are those usually found in documents creating trusts, making provisions for appointment of trustees, management of trust property, discharge from office of trustees etc., and no special reference is needed for any found therein as none has any special significance. But, we may, however, note that there is no prohibition as such for transfer of beneficial interest in Trust Fund by beneficiary. argument of Sri Jetly was that trustee is bound to fulfil propose of trust and obey directions of author, given at time of creation of trust, and any modification of terms of trust can only be with consent of beneficiaries vide s. 11 of Trusts Act. Elaborating his argument, he stated that, in this case, first trustees were bound to distribute net income equally among four beneficiaries till anniversary of 25th year from time of creation when corpus of Trust Fund has to be divided in same proportion and delivered to four beneficiaries. It was canvassed that trustees had not even been consulted when gifts were made on 26th March 1975 by Shashi Kant. B. Garware and that ratification or afirmance of trustees was long after assignments and this was violate of provisions in s. 11 of Trusts Act. It was contended that, giving effect to gift deeds dt. 26th March 1975 would amount to modification of trusts, for trustees would be handing over corpus to company which had not been intention of authors at all. argument of Shri Jetley, mainly, was that WT Act recognises only legal ownership and that such legal ownership indisputably existed in trustees and that since these persons having not been either parties to assignment deeds dt. 26th March 1975 or assented to any modifications of terms of trust, beneficiaries cannot be legally regarded as full owners of asset to be competent to make transfer. In this connection, decision of Bombay High Court in case of CGT vs. Mrs. Jer Mavis Lubimoff 1978 CTR (Bom) 28: (1978) 114 ITR 90 (Bom) was relief upon. decision of Calcutta High Court in case of CIT vs. Ganga Properties Ltd. (1970) 77 ITR 637 (Cal) was cited in support of proposition that "in Indian Law beneficial ownership, is unknown; there is but one owner, namely, legal owner, both in respect of vendor and purchaser and trustee and cestui que trust." It is held in this case that only legal owner of property can be assessed under IT Act. On that analogy, Sri Jetley argues, legal ownership in Trust Fund remains with trustees and, as such, transfer made by beneficiary alone did not result in valid gift. Sec. 11 of Trusts Act, in our judgment, is not attracted at all. This section specifies about obligations on part of trustee to fulfil and obey directions of author of trust and that any modification could be made with consent of beneficiaries. In present case, there is no question of trustees violating terms of trust. direction to pay out of net income to HUFs of four sons of authors for period of 25 years is not disturbed. Remainder is to be given absolutely to same beneficiaries in equal shares at end of 25th anniversary. He, trustees would have been bound to deliver 1/4th share in corpus to Shashikant B. Garware HUF, but now they are to hand over to assignee of assessee at instance of assignor. trust would have ended moment corpus is handed over after end of 25th year. Even now trustees would have over property as per appointment made by Shashikant B. Garware. beneficiary can either himself accept benefit or appoint another of his choice and give suitable direction to trustees in this behalf. We see no violation of terms of trust. present is case entirely falling within province of s. 58 of Trusts Act which in clear terms recognises competence of beneficiary to transfer his beneficial interest and this power is only subject to law for time being in force and extent to which beneficiary can dispose of such interest. This is not case coming under proviso to s. 58. Unless there are restraints placed upon powers of beneficiary by any other law, beneficiary, who is otherwise competent to contract, has power of making transfer of his interest. This principle has been succinctly explained by Supreme Court in case of CIT vs. Smt. Kastrubai Walchand Trust (1967) 63 ITR 656 (SC) and we may add here that this authority has closest resemblance ITR 656 (SC) and we may add here that this authority has closest resemblance on facts to gift effected by Shashikant B. Garware in favour of Romesh B. Garware Investment Co. P. Ltd. CGT vs. Mrs. Jer Movis Lubimoff 1978 CTR (Bom) 28; (1978) 114 ITR 90 (Bom) appears to altogether on different point. Certain 'J was beneficiary under trust entitled to receive income from trust fund for her life. clause in deed of trust specified that trustees would hold trust fund for benefit of child or children or remoter issue of 'J after her death, upon such conditions, restrictions or appointments and in accordance with new appointment she may make. said 'J by deed of poll, executed by her, exercised power of appointment vested in her in favour of her daughter and simultaneously executed deed of release surrendering her interest. question was, whether deed of poll amounted to 'gift or disposition of property according to provisions in Gift-tax Act and indenture of release did not amount to gift, to be taxed under GT Act. In this case, it was found that appointment, by execution of deed of poll made by 'J , did not, in law, amount to 'gift and no such thing obtains in present appeal. assignment made on 26th March 1975 by Shashikant B. Garware, as Karta of joint family, is gift within meaning of GT Act as document purports to transfer beneficial interest in corpus without money consideration. Indeed, Revenue has accepted assignment as fifth and, on that basis gift-tax assessment has been made. It is one thing to say that indenture dt 26th March 1975 does not amount to gift and quite another that expectants had no power to effect transfer. revenue does not dispute that assignment dt. 26th March 1975 in law, amount to gift. We have gone through documents and satisfied that valid gift of property has been made. So far as powers of Shanshikant B. Garware, prima-facie, s. 58 recognised power and unless that power is subject to any limitation by any other law for time being in force, transfers must be held to be valid. It was argued on behalf of Revenue that s. 58 cannot be read in isolation and power of beneficiary must be examined in juxtaposition with s. 11 of Trusts Act. It was also stated that word 'transfer found in s. 58 does not include gift. We do not think that argument can succeed. Sec. 11 and s. 58 of Trusts Act deal with different aspects. While s. 11 specifies obligations on part of trustees to obey directions of author in operating trust, s. 58 deals with power of beneficiary in matter of transfer of his beneficial interest. modification of trust for which consent of beneficiary is required has nothing to do with transfer of beneficial interest by beneficiary and, in this case, by assignment, trust is not effected. Turning to CIT vs. Ganga Properties Ltd. (1970) 77 ITR 637 (Cal), question was, whether person holding possession of immovable property under agreement for sale was liable to be taxed for income from house property and as held by their lordships of Calcutta High Court such income from house property could only be from date of actual conveyance and not earlier. stress for absolute ownership as essential condition was for assessment under IT Act. analogy sought to be applied to attack assignments dt. 26th March, 1975 cannot be countenanced for simple reason that Revenue has not sought to tax trustees (the legal owners) under WT Act and, as we see, it is beneficial owner that is being assessed for wealth-tax in respect of HUF assets including interest in Trust Fund. In any event, in considering validity of transfer from point of s. 58 of Trusts Act in CIT vs. Ganga Properties Ltd. (1970) 77 ITR 637 (Cal) provides no answer. We are clear that beneficiary may transfer his interest in trust and even notice to trustee is not contemplated See Agarwala on Indian Trust Act (6th Edn, page 543). decision of Bombay Bench of Tribunal in case of Surajba Patel Trust, Bombay (ITA Nos. 2007 (Bom)/82 and 22 (Bom) (1983) was cited on behalf of assessee and this, as rightly pointed out by Sri Jetley cannot be authority to case of assessee, for there is distinction on one essential fact, namely, deed of assignment had been jointly executed by trustees and beneficiaries. Shashikant B. Garware HUF was remainderman in so far as 1/4th interest in corpus of Trust Fund. remainder is transferred absolutely in favour of Romesh B. Garware Investment Co. (P) Ltd. and assignee is to get possession of 1/4th share of corpus after period of 25 years from date of trust. Having regard to powers of beneficiaries under s. 58, Trusts Act, such transfer must be valid unless there are limitations placed upon exercise of such powers by any other law. joint family of Shashikant B. Garware, consisted of only himself, his wife and three minor daughters. He was sole-surviving coparceners at time of assignments or gifts. property gifted or transferred was asset of joint family. What we have to see is, whether transfer is invalidated mainly because asset of joint family is gifted away by Karta and this requires to be tested only from point of Hindu Law. We are familier with principal that sole surviving coparcener is entitled to dispose of his family property as if it was his own property without legal necessity or family benefit and even son subsequently born cannot challenge such alienation made before his birth See: Mulla s Hindu Law (15th Edn.), Arts. 255 and 257. principle is also explained by Bombay High Court in case of CIT vs. Anil J. Chinai (1984) 42 CTR (Bom) 6: (1984) 148 ITR 3 (Bom). Sri Dastur contended that father or other managing member can also gift, within reasonable limits, ancestral property, movable or immovable, under authority of Hindu Law and he invited our attention to Art. 225 in Mulla s Hindu Law and, in our opinion, it is unnecessary to see if donor had over-stepped limit as undisputedly Shashikant B. Garware was sole surviving coparceners and his power in matter of alienation of joint family property is same as any other self- occupied property. Another point raised by Sri Dastur is also relevant in this context. transfer of type made by Shashikant B. Garware, as Karta of joint family, is not void ab inito, but only voidable at instance of other members of family whose interests are effected. stranger cannot question gift. In case, like present one, where gift is by sole-surviving coparcener, even after-born son cannot attach same, and least of all by Revenue. decision of Rajasthan High Court in case of CIT vs. Brahm Dutt Bhargava (1962) 46 ITR 387 (Raj) and that of Allahabad High Court in case of Juggal Kishore Jaiprakash vs. CIT (1971) 79 ITR 598 (All) cited by Sri Dastur, indicate that validity of gift cannot be challenged by Revenue being strangers to family. last limb of argument of Sri Jetley was that gift in favour of Investment Co. is contrivance made for purpose of evasion of wealth-tax and stated purpose is in para 8 of assignment deed is nothing but specious reason and that Courts should refuse to recognise artificial transaction brought about to over-reach Revenue in matter of payment of tax. In support, emphasis was laid upon statement of Supreme Court in recent decision in Mc Dowell s case since reported in (1985) 47 CTR (SC) 126: (1985) 154 ITR 148 (SC): " Courts are now concerning themselves not merely with genuineness of transaction, but with intended effect of it for fiscal purpose. No one can now get away with tax avoidance project with mere statement that there is nothing illegal about it." WTO has made critical observations on assignment deeds dt. 26th March 1975 in para 4 of his order and he notices that there has been systematic attempt at tax evasion by transferring property to Investment Company when it is unknown as to who are shareholders of this company who would be benefited by gift. We had opportunity of reading full judgment of Supreme Court in Mc Dowell s case, since reported in (1985) (Civil Appeal No. 570 1983). Their Lordships have made review of entire English case law and earlier renderings of Supreme Court on subject to remark that West Minster Principle has been emphatically departed from by British Courts and they have even dissociated from observations of Justice Shah in case of CIT vs. Raman & Co. (1968) 67 ITR 11 (SC); (1968) 1 SCR 10. Sri Dastur argued that rule enunciated should be understood in light of facts of that case to discover invisible line that distinguishes tax avoidance and tax evasion. In Mc Dowell s case (supra), manufacturer had incurred liability of Excise Duty and, thereafter, attempted to exclude duty from turnover (with obvious intention of deflating turnover for avoiding sales tax) on reason that purchaser had paid duty directly to Excise Department. This, according to Supreme Court, was tax evasion as payment of duty by purchaser was for and on behalf of dealer. In summing up, their lordships have said: "In our view, proper way to construe taxing statute, while considering device to avoid tax, is not to ask whether provisions should be construed literally or liberally, nor whether transaction is not unreal and not prohibited by statute, but whether transaction is device to avoid tax, and whether transaction is such that judicial process may accord its approval to it. hint of this approach is to be found in judgement of Desai J, in Wood Ploymer Ltd. vs. Bengal Hotels Ltd. (40 Company Cases 597) where learned judge refused to accord sanction to amalgamation of companies as it would lead to avoidance of tax." Chinnappa Reddy J. observes "tax avoidance, it seems, is legal; tax evasion is illegal". In present appeals, question of tax effect is not being decided not in reference to provisions in taxing statute; but to see whether transfer effected by Shashikant B. Garware, as Karta, is or is not valid from provisions of Indian Trusts Act and principles of Hindu Law. There is silver line of distinction between tax prevention in legal manner and evasion which, of course is illegal. If person has incurred liability to tax, then anything done to prevent payment thereof is, undoubtedly evasion. If person has not incurred liability to tax and colourable transaction done involving element of illegality and to circumvent provisions of law to prevent payment of tax, then also transaction ought not countenanced if motive is obvious. But it no tax liability had arisen and transaction is free from any legal objection and secures certain relief to assessee as consequence then such transaction cannot be successfully assailed merely because it has resulted in tax reduction. present is instance of last mentioned class. owner of property has unrestricted right to deal with it in manner he likes subject to recognised limitations. Department cannot compel owner of property to continue to hold same and get assessed to wealth-tax and any restriction upon his power of alienation is opposed to rule against perpetuity recognised in s. 10 of Transfer of Property Act, as we have already pointed out transfer made by Shashikant B. Garware, as Karta, is sound on legal basis. Shashikant B. Garware HUF is not trying to avoid tax for which liability had been incurred. What he sought to prevent is only payment of wealth-tax to accrue in future years if, at all, asset should continue to remain in family. As we have already shown, transfer does not involve any element of illegality and it is, at worst, avoidable transfer capable of being assailed by members of family affected by transfer made. Para 8 in deed of assignment reads that continuance of status-quo of joint family was likely to wipeout or considerably deplete assets of family on account of tax incidence apart from contingency to borrow money for sake of payment of tax and that it was not even in interest of minor daughters that such situation should continue. statement was produced to show how joint family was saving on account of gift made. As we gather from statement, incidence of tax of joint family was steadily on increase from asst. yrs. 1970-71 to 1973-74 and in asst. yr. 1974-75, it would have incurred loss of Rs. 71,000 had this transfer not been made. family is going to save to tune of Rs. 80,000 or so per year. It does not appear to us that purpose of assignment, set out in para 8 of document, is spurious. At any rate, there is no illegality about it, for what is sought to be achieved, is tax relief in future wealth-tax assessments. joint family has many other assets also and marginal rate of tax at time of gift was 8 per cent., therefore, continuance of interest in corpus of Trust Fund would have been more burdensome and to get some relief gifts were made in favour of investment company belonging to family group. Neither assignments could be soundly attacked on moral grounds. For foregoing, we hold that beneficiary was competent to transfer/gift beneficial interest in corpus of Trust Fund and such transfer made by Shashikant B, Garware, as Karta of HUF, was valid and t h t Revenue has no right to challenge same in these wealth-tax assessments. conclusion reached by first appellate authority is unassailable and same is affirmed by us. These appeals, therefore, fail and they are dismissed. *** FIRST WEALTH-TAX OFFICER v. S. B. GARWARE (HUF)