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Issues:
1. Determination of whether the assessee trust is a genuine trust or an association of persons. 2. Assessment of income in the status of association of persons and applicability of maximum marginal rate under section 167A. Analysis: Issue 1: The case involved questions referred by the Income-tax Appellate Tribunal regarding the nature of the assessee trust. The Assessing Officer concluded that the trust was not valid and treated it as an association of persons due to the indeterminate shares of beneficiaries. The Tribunal found that the trust was not genuine as it was created to avoid tax payment. The court upheld the Tribunal's finding, stating that the trust lacked genuineness based on the evidence provided by the settlor and beneficiaries. Issue 2: The second part of the first question addressed whether the income should be assessed in the status of association of persons. The court highlighted that there was no evidence of the grandchildren joining together for a common purpose to conduct business. Referring to a previous case, it was emphasized that an association of persons requires a joint enterprise to produce income. As the grandchildren did not act collectively to generate income, the assessment as an association of persons at the maximum marginal rate was deemed incorrect. In conclusion, the court affirmed the Tribunal's decision that the assessee trust was not genuine. However, it rejected the assessment of income in the status of association of persons, emphasizing the lack of evidence of a joint enterprise by the beneficiaries. The matter was remanded to the Tribunal for determining the correct entity for income taxation without any costs awarded.
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