TMI Blog1996 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 164(1) of the Income-tax Act, 1961, in respect of its assessment to income-tax for 1974-75? 2. Whether, on the facts and in the circumstances of the assessee's case, the Income-tax Appellate Tribunal was right in law in holding that the share of the beneficiary during the previous year relevant to the assessment year 1974-75 was unknown and indeterminate? and 3. Whether, on the facts and in the circumstances of the assessee's case, the Income-tax Appellate Tribunal was right in law in omitting to apply the principles laid down by the decision of the Supreme Court in CWT v. Trustees of H. E. H. Nizam's Family (Remainder Wealth) Trust [1977] 108 ITR 555, and in omitting to consider whether, during the previous year, relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id down in the abovesaid decision, the beneficiary is known and the shares of the beneficiaries are determinate, and therefore the Department was not correct in levying tax at the maximum rate. The Tribunal, after going through the clauses contained in the settlement deed, held that the beneficiary is not known and the share is also indeterminate, and, therefore, the Tribunal held that the authorities below were correct in applying the maximum rate of tax. Before us, learned counsel appearing for the assessee submitted that during the accounting year relevant to the assessment year under consideration, there was only one beneficiary. Therefore, it cannot be said that the beneficiary is not known in the present case. According to learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eviable in the case of the assessee. In the assessment year 1974-75, the assessee filed a return stating that the beneficiary is known and the shares are determinate and, therefore, the ordinary rate of tax should be levied, and the maximum rate of tax is not leviable. The assessee-trust was created under the settlement deed, dated March 25, 1973. The grandfather M. A. Chidambaram, created the trust in favour of the daughters of A. C. Muthiah and Devaki Muthiah. Anusuya Muthanna and R. Muthu are appointed as trustees. A. C. Muthiah and Smt. Devaki Muthiah are the parents of the minor child. During the assessment year under consideration, the trust had an income of Rs. 28,411. If the beneficiary is known and the shares are determinate, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a minor. "Should none of the beneficiaries attain majority, the trustees may in their absolute discretion distribute the entire trust assets to any of my lineal descendants." Under clause 7(c) in exercising the abovesaid powers, the trustees shall take into account the relative position, financial or otherwise, and the requirements of the respective beneficiaries and make the distribution in such manner as they think most appropriate and fitting in the circumstances. Under clause 8(b) the trustees shall continue to hold the trust assets in their hands and the beneficiaries shall not be entitled to make any claim for possession or for payment or otherwise of the whole or any portion of the trust assets except to receive the payment that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rth or death would not take the case out of the ambit of sub-section (1) of section 21. It is no answer to the applicability of sub-section (1) of section 21 to say that the beneficiaries are indeterminate and unknown, because it cannot be predicated who would be the beneficiaries in respect of the remainder on the death of the owner of the life interest. But the facts are entirely different in the present case. Even according to the settlement deed, the said Abirami who is the only one minor child mentioned in the settlement deed, has not attained majority as on the last date of the accounting year. According to the settlement deed, the term "beneficiary" or "beneficiaries" shall mean Kumari Abirami, born on August 11, 1968, who would be e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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