TMI Blog2016 (8) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... rcised by the Revenue. This option is available even in case of discretionary Trusts. Therefore, even in case the Revenue's contention is upheld on merits, it would not yet exclude the application of option in Section 166 of the Act which in this case has already been exercised. Therefore, the substantial question 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 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie, erroneous in so far as it was prejudicial to the interests of revenue and issued a show cause notice 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 confirmed the order of the CIT for the detailed reasons given in its order (Annexure E). The Tribunal examined the contents of the trust deed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance 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 context that the substantial question of law is framed by the Tribunal for considering the true impact on the interpretation of Explanation 1(ii) to Section 164 of the Act. 4. Mr. Pardiwalla, Sr. Counsel appearing in support of the Reference submits that the question as posed for our opinion has become academic in view of the subsequent decisions of the Apex Court in Jyotend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause that Nothing in the foregoing Section of this Chapter would take away the option of the Revenue to make a direct assessment upon the beneficiary or upon the discretionary trust in the hands of the trustees. 6. 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 the beneficiaries as per the Trust Deed. Consequently, the tax was recoverable from the beneficiaries of the Trust. Therefore, the option as provided under Section 166 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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