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2008 (2) TMI 640 - HC - Income TaxRevocation of trust - by sole beneficiary - The respondent trust was created in the year 1981 when the sole beneficiary Mr. Nelson was a minor aged 14 years. The trust was to be operative until the beneficiary became 21 years of age and thereafter the trust property was to be transferred to the beneficiary - on becoming major - sole beneficiary revoked the trust and took over the assets and business of the trust and started carrying on business as the proprietor - Assessing Officer held that the trust is continuing business and consequently the respondent was assessed as a trust, Even though the beneficiary was also assessed in his individual capacity on the same income, the respondent - Held that: - trust otherwise created can be revoked only- (a) where all the beneficiaries are competent to contract by their consent ; (b) where the trust has been declared by a non-testamentary instrument or by word of mouth-in exercise of a power of revocation expressly reserved to the author of the trust ; or (c) where the trust is for the payment of the debts of the author of the trust, and has not been communicated to the creditors-at the pleasure of the author of the trust - sole beneficiary opted to revoke the trust in exercise of his authority under section 78 of the Trusts Act, the Department cannot insist and hold that the trust will continue in force till the duration as stated in clause 2 of the trust deed - Appeal is dismissed
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