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2013 (4) TMI 448 - HC - Income TaxOrder U/s 263 of the Income Tax Act? - Claiming that the income of the trust was exempt -Held that - Tribunal has considered the matter in great depth and has noticed that the trust Deed is a registered document - The trust Deed is on the file - The Settler was the maternal uncle of the beneficiaries - The Tribunal has examined the matter and found that there is sufficient material on record to show that as a matter of fact, the trust was created and it is a trust which carried on it s business - The findings recorded by the Tribunal are essentially findings of fact - in favour of Assessee.
Issues:
1. Legality of canceling order passed by the Commissioner of Income Tax under section 263 of the Income Tax Act. Analysis: The High Court was presented with a question of law regarding the cancellation of an order passed by the Commissioner of Income Tax under section 263 of the Income Tax Act. The dispute pertained to the assessment year 1981-82, where the assessee claimed to be a Trust created by settling a sum of Rs. 5,000 on trust for minor daughters and sons of a specific individual. The trustees were appointed with the power to conduct business, and the income of the trust was declared exempt for that assessment year as the beneficiaries' shares were below the taxable limit. The Income Tax Officer initially accepted the return, but the Commissioner of Income Tax revised the order under section 263, citing that the assessment was concluded hastily without proper inquiry. The Commissioner set aside the assessment, directing a de novo assessment after proper investigation. However, the Tribunal disagreed with the Commissioner's opinion, finding that the Assessing Officer had conducted necessary inquiries and that the creation of the Trust was not against the Rule of Perpetuity as per the Transfer of Property Act. The Tribunal's decision was based on a thorough examination of the trust deed, which was a registered document, and the material on record indicating the trust's existence and business activities. The Tribunal's findings were considered factual, leading to the conclusion that the assessment was not erroneous or prejudicial to the revenue's interest. Consequently, the High Court ruled in favor of the assessee, holding that the Tribunal's decision was justified, and the order passed by the Commissioner of Income Tax under section 263 was canceled lawfully.
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