Arijit Pasayat, C.J.

1. Pursuant to directions given by this Court in in ITC No. 44/92 under Section 256(2) of the Income-tax Act, 1961 (in short the Act), following question has been referred for opinion of this Court by the Income-tax Appellate Tribunal, Delhi Bench C (in short the Tribunal) :

Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the Trust settled for the benefit of the sole beneficiary first son of Shri Rakesh Mohan who was unborn at the time of creation of the Trust, is a valid Trust

2. Factual background in nutshell is as follows :

Assessee settled 60,000 equity shares of Mohan Meakin Breweries Ltd. of the face value of Rs. 5/- each for the benefit of first son of Shri Rakesh Mohan, son of late Col. V.R. Mohan. For this purpose a Trust was created on 2.5.1974. Income-tax Officer (in short the ITO) was of the view that the trust was not valid and effective as there was no existence of any beneficiary. Income arising out of the aforesaid shares was included in the income of the assessee. Matter was carried in appeal before the Commissioner of Income-tax (Appeals) [in short the CIT(A)]. Adopting the view expressed earlier, in some cases the CIT(A) deleted the addition. Matter was carried in appeal before the Tribunal by the Revenue. It was Revenues stand that in the absence of a definite or known beneficiary, creation of the Trust itself was invalid. Tribunal did not accept the stand. A prayer for reference under Section 256(1) of thewas turned down. Subsequently, pursuant to the directions of this Court, the aforesaid question has been referred for opinion alongwith statement of case.

3. We have heard learned Counsel for the parties. Stand of learned Counsel for Revenue is that in the absence of known beneficiary, a Trust is a misconceived idea. According to him, for constituting a valid Trust there must be a definite and an existent beneficiary. According to learned Counsel for the assessee, if the description of the beneficiary is there, it would be sufficient compliance with the requirements of law.

4. In order to constitute a valid Trust the author of the Trust must indicate with reasonable certainty : (a) the intention on his part to create a trust; (b) the purpose of the Trust; (c) the beneficiaries; (d) the trust property; and (e) transfer of property to the Trust. According to learned Counsel for the Revenue except Condition (c) all other conditions are present here. We find that it is not a case where the beneficiary was unknown or indefinite. In fact it was clearly stipulated that the beneficiary was the first son of Shri Rakesh Mohan. At this juncture, it would be also relevant to take note of Section 13 of the Transfer of Property Act, 1882 (in short T.P. Act). Section 13 reads as follows :

13. Where, on a transfer of property, an interest therein is created for the benefit of a person not in existence at the date of the transfer, subject to a prior interest created by the same transfer, the interest created for the benefit of such person shall not take effect, unless it extends to the whole of the remaining interest of the transferor in the property.

As per the illustration appended to the provision where A transfers his property to B in trust for A and his prospective wife successively for their life and after the death of the survivor, for the eldest son of the intended marriage for life and after his death for As second son, the interest created for the benefit of the eldest son does not take effect for the reason that it does not extend to the whole of As remaining interest in the property.

5. A transfer cannot be made directly to an unborn person, for the definition of transfer in Section 5 is limited to living persons. Such transfer can only be made by the machinery of Trusts. Possibly, the express this distinction, the expression for the benefit of has been used, since trustees being the transferees hold the property for the benefit of the unborn person.

6. In the case at hand the entire interest in the property goes to the benefit of the child to be born to Shri Rakesh Mohan. As the facts go to show, in fact a child was born in August, 1977. What would have happened if Rakesh Mohan did not get a male child is also spelt out in the trust deed.

7. Above being the position, the Tribunal was justified in its conclusion. The question referred is answered in the affirmative, in favour of the assessee and against the Revenue.

The reference stands disposed of.