TMI Blog2005 (8) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... that maximum marginal rate was chargeable under section 167A? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that in the alternative, the assessee-trust was a discretionary trust because of the fact that shares of ultimate and real beneficiaries were unknown or indeterminate and hence provisions of section 164 would. be attracted and tax at maximum marginal rate would be chargeable?" The assessment year is 1982-83 and the accounting period is the year ended on June 30, 1981. The assessee filed return declaring total income at nil on July 18, 1984. Subsequently, the return was revised on December 28, 1984, declaring total income at nil, but the revised return was accompanied by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the trust deed dated July 5, 1979, the property settled upon the trust was not to revert to the settlor, but was required to be distributed amongst the aforesaid 12 persons equally; that the shares of 12 grandchildren were indeterminate and unknown and hence, the income had to be taxed in the hands of such association of persons at the maximum marginal rate. The assessee having failed before the Commissioner (Appeals), carried the matter in second appeal before the Tribunal. The Tribunal has taken note of the statement given by the settlor wherein the settlor has clearly stated that she had created the assessee-trust for the benefit of 12 grand-children; that 45 trusts had been named as beneficiaries instead of 12 grand-children on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, coming to the second part of question No. 1, namely, whether the income is liable to be assessed in the status of association of persons, it is necessary to take note of the fact that the entire premise on which the Assessing Officer has proceeded and which finding has been confirmed by the Tribunal, is incorrect in law. There is no finding recorded by anyone that the 12 grandchildren of the settlor had opted to join together for the purposes of conducting the business. Accepted position is that the business was conducted and the Assessing Officer has computed the income on the basis of the net profit as per books maintained by the assessee. In the case of CIT v. Indira Balkrishna [1960] 39 ITR 546 (SC), in almost a similar situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al rate was chargeable under section 167A of the Act, is required to be answered in the negative. In the light of answer to question No. 1, it is not necessary to render any opinion as regards question No. 2 and the said question is, therefore, left unanswered. In the light of the answer to the second part of question No. 1, the Tribunal will be required to determine as to who is the correct person in whose hands the income in question for the assessment year is liable to be taxed. It will be open for the Tribunal to take additional evidence on record, if necessary, or to restore the matter to the file of the Assessing Officer to pass an appropriate order. The reference stands disposed of accordingly. There shall be no order as to costs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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