Can terms direct to accummulate income of property
Can the terms of transfer direct that income, arising from the property, should be accumulated?
The terms of transfer can direct that income, arising from the property, must be accumulated. However, Section 17 of the Act provides that, if the period for which such accumulation is to be done exceeds the following:-(i)The life of the transferor, or (ii)A period of eighteen years from the date of transfer; such direction will be void to the extent to which the period exceeds rather than the period mentioned above. At the end of such period, the income is to be disposed of as if the period that is directed has elapsed.
However, this provision shall not affect any direction for accumulation for the following purposes:-
- the payment of the debts of the transferor or any other person, taking any interest under the transferor; or
- the provision of portions for children or a remoter issue of the transferor or, of any other person, taking any interest under the transfer; or
- the preservation or maintenance of the transferred, property and, such direction may be made accordingly.
Transfer in perpetuity for the benefit of the public:
The restriction in the Section does not apply in the case of a transfer of property for the benefit of the public, in the advancement of religion, knowledge, commerce, health, safety or any other object for the benefit of mankind.
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