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2016 (8) TMI 321 - BOMBAY HIGH COURT

2016 (8) TMI 321 - BOMBAY HIGH COURT - TMI - Applicability of section 164 Explanation 1(ii) - whether the Trust is assessable at maximum rate? - Held that:- Our attention is invited to Annexure 'B' to the statement of case i.e. the Assessment Order dated 21st March, 1983 passed in respect of the trust as an AOP. The Assessment Order determined the total income at ₹ 1.54 lakhs, while categorically holding that no demand is payable by the Trust as the income of the Trust is divided amongst t .....

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estion of law as raised for our opinion is being returned unanswered as it has now became academic in view of the decision of the Apex Court rendered in Jyotendrasinhji (1993 (4) TMI 1 - SUPREME Court ). The above decision was rendered after the making of the statement of case along with the question of law framed by the Income Tax Appellate Tribunal for our opinion. - Income Tax Reference No. 18 of 1999 - Dated:- 29-7-2016 - M. S. Sanklecha And A. K. Menon, JJ. Mr. Percy Pardiwalla, Sr. Advocat .....

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64 for holding that the Trust is assessable at maximum rate? . 2. The above question arises from the facts as set out in the statement of case as under: (a) Dr. G. S. Mirje settled a sum of ₹ 1,000/on trust on or about 2.8.1976 and reduced the terms of settlement to writing (Annexure A). In terms of the mandate given by the Settler, the Trustees carried on business in the name and style of Mirje Enterprise, Kolhapur with a branch at Belgaum. The business in purchase and sale of scooters an .....

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e dated 5.11.84 (Annexure C) proposing revision of the ITO's order u/s. 263. In reply, the assessee resisted the proposed action and made certain contentions including an alternate contention which has been summarised by the CIT in his order u/s. 263 (Annexure D) in para 7 to 10. The CIT was not, however, impressed by these arguments and rejected the same for reasons given in para 11 onwards. (c) Aggrieved by the decision of the CIT, the assessee filed an appeal to the Tribunal which confirm .....

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t the assessee trust is hit by the explanation 1(ii) to section 164 introduced by the Finance Act, 1980. 3. The ApplicantTrust is governed by the provisions of the Trust Deed executed on 2nd August, 1976. It has been assessed as a specific Trust. This is so as the shares of the beneficiaries were determinate and tax was levied in the hands of the beneficiaries for Assessment Years 1978-79 and 1979-80. The aforesaid Trust Deed was modified by the Rectification Deed dated 21st October, 1979. By th .....

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es was withdrawn only by Deed of Rectification. Therefore, Section 164 of the Act would be applicable and in particular, reliance was placed upon Explanation 1(ii) of Section 164 of the Act which provides that in case the individual shares of the beneficiaries is not expressly stated in the instrument on the date of execution of the deed of trust, then it would be considered to be a discretionary Trust. In such a case, the tax is to be paid by the Trustees of the Trust. It was in the above conte .....

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endered in the context of Section 166 of the Act. It is particularly emphasized that the statement of case is dated 18th March, 1987 while all the aforementioned three decisions are rendered post 1993. In fact, the Tribunal itself for subsequent Assessment Years 1981-82, 1982-83 and 1983-84 has by order dated 21st December, 2000 allowed the Applicant-Assessee's appeals before it by relying upon the aforesaid decisions on the scope of Section 166 of the Act in an Appeal arising in the same co .....

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