Case: C. T. Senthilnathan Chettiar Vs. State of Madras

settlor and/or if any other circumstances intervene requiring the cancellation or alteration of this deed of settlement." 2. The Agricultural Income-tax Officer included the income from the lands settled under this deed in the hands of the assessee. The assessee filed a revision before the Commissioner of Agricultural Income-tax who held that the document evidenced a revocable transfer and the settled lands were an asset remaining the property of the settlor within the meaning of section 9(1) of the Act. He refused to exclude the income from the lands settled in the deed from the assessable income of the assessee. The assessee then filed a revision under section 54(1) of the Act to the High Court. The High Court agreeing with the Commissioner held that the settlement was hit by section 9(1) of the Act. The assessee having obtained leave from this court, the appeal is now before us. 3. We may mention that this court at the time of hearing of the application under article 136 gave liberty to the appellant to urge additional grounds, one ground being that section 9(1) of the Act was ultra vires the legislature and also violative of article 14 of the Constitution of India. The relevant provisions of section 9(1) of the Act, which are in terms similar to section 16(1)(c) of the Indian Income-tax Act, 1922, are as follows " 9. (1) In computing the total agricultural income of an assessee, all agricultural income arising to any person by virtue of a settlement or disposition, whether revocable or not, and whether effected before or after the commencement of this Act, from assets remaining the property of the settler or disponer, shall be deemed to be the agricultural income of the settlor or disponer, and all agricultural income arising to any person by virtue of a revocable transfer of assets shall be deemed to be agricultural income of the transferorrovided that, for the purposes of this sub-section, a settlement, disposition or transfer shall be deemed to be revocable if it contains any provision for the retransfer directly or indirectly of the agricultural income or assets to the settlors disponer or transferor or in any way gives the settlor, disponer or transferor a right to reassume power directly or indirectly over the agricultural income or assets Provided further that the expression settlement or disposition shall, for the purposes of this sub-section, include any disposition, trust, covenant, agreement or arrangement and the expression settlor or disponer in relation to a settlement or disposition shall include any person by whom the settlement or disposition was made Provided also that this sub-section shall not apply to any agricultural income arising to any person by virtue of a settlement or disposition which is not revocable for a period exceeding six years or during the lifetime of the person and from which agricultural income the settlor or disponer derives no direct or indirect benefit but that the settlor shall be liable to be assessed on the said agricultural income as and when the power to revoke arises to him. " 4. The learned counsel for the appellant contends that the case was governed by the third proviso to section 9(1) and that till the power of revocation was exercised the income should not be assessed in the hands of the assessee. He further contends that the settlement deed creates two interests, viz., a life interest coupled with and followed up by an absolute interest created in favour of the children of the settlor through the settlee, and even if the initial transfer in favour of Vatsala is terminated under the deed, the ultimate transfer gets accelerated ; in other words an absolute estate becomes vested in the children. The learned counsel also relies on section 126 of the Transfer of Property ActIn our opinion, the High Court was right in holding that the settlement deed amounts to a revocable transfer of assets within section 9(1), proviso 1. The settlement deed specifically reserves power to the settlor to cancel or revoke or alter the settlement in any circumstances which require the cancellation or alteration of the deed of settlement. It seems to us that this clause falls squarely within proviso 1, for the assessees could at any time reassume power over the assets or the agricultural income by just cancelling or altering the terms of the deed 5. We are unable to appreciate how section 126 of the Transfer of Property Act helps the assessee. If section 126 is applicable, it is quite clear that the gift would be wholly void. But we are not concerned with this question. We assume that the gift is valid, but the settlor has specifically retained the power to cancel or revoke or alter the settlement 6. The learned counsel then urges that section 9(1) of the Act is void. He points out that a similar question regarding the validity of section 16(1)(c) of the Indian Income-tax Act, 1922, was left open in Sardar Baldev Singh v. Commissioner of Income-tax and Balaji v. Income-tax Officer, Special Investigation Circle, Akola. But we are unable to allow him to raise this point because this court has held in K. S. Venkataraman & Co. v. State of Madras that the authorities under a taxing statute are not concerned with the validity of the taxing provisions and the question of ultra vires is foreign to the scope of their jurisdiction. As no such point could be raised before the income-tax authorities, neither the High Court nor the Supreme Court can go into these questions in at revision or reference from the decision of those authorities. This case was followed in Commissioner of Income-tax v. Straw Products LtdThere is nothing in article 142 of the Constitution relied on by the counsel to enable us to deal with the question in the present appeal. Accordingly, we cannot allow him to urge this point before us, but it would be open to him to raise the point in any appropriate proceeding

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]In our opinion, the High Court was right in holding that the settlement deed amounts to a revocable transfer of assets within section 9(1), proviso 1. The settlement deed specifically reserves power to the settlor to cancel or revoke or alter the settlement in any circumstances which require the cancellation or alteration of the deed of settlement. It seems to us that this clause falls squarely within proviso 1, for the assessees could at any time reassume power over the assets or the agricultural income by just cancelling or altering the terms of the deed5. We are unable to appreciate how section 126 of the Transfer of Property Act helps the assessee. If section 126 is applicable, it is quite clear that the gift would be wholly void. But we are not concerned with this question. We assume that the gift is valid, but the settlor has specifically retained the power to cancel or revoke or alter the settlementBut we are unable to allow him to raise this point because this court has held in K. S. Venkataraman & Co. v. State of Madras that the authorities under a taxing statute are not concerned with the validity of the taxing provisions and the question of ultra vires is foreign to the scope of their jurisdiction. As no such point could be raised before thex authorities, neither the High Court nor the Supreme Court can go into these questions in at revision or reference from the decision of those authorities. This case was followed in Commissioner ofx v. Straw Products LtdThere is nothing in article 142 of the Constitution relied on by the counsel to enable us to deal with the question in the present appeal. Accordingly, we cannot allow him to urge this point before us, but it would be open to him to raise the point in any appropriate proceeding