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Issues:
1. Status of assessee as Artificial Juridical Person. 2. Tax treatment of the Trust. 3. Genuineness of contributions received by the Trust. Issue 1: Status of assessee as Artificial Juridical Person The judgment deliberates on whether the assessee Trust can be classified as an Artificial Juridical Person. The concept of a juristic person is discussed, emphasizing its role as a unit of assessment. The absence of a specific definition of Juridical Person in the Income-tax Act, 1961 is noted. The judgment highlights the distinction between an Artificial Juridical Person and other categories of persons defined in the Act. It analyzes the nature of the Trust in question, considering the purpose and structure of the Trust as per the Trust Deed. The judgment concludes that the Trust cannot be treated as a Juridical Person and should be assessed as an Association of Persons (AOP) based on the facts presented. Issue 2: Tax treatment of the Trust The judgment examines whether the Trust should be subjected to the maximum marginal rate of tax. It refers to the Indian Trust Act, 1882 to define the elements necessary for the creation of a Trust. The objects of the Trust as outlined in the Trust Deed are scrutinized, focusing on the allocation of resources for each objective. The judgment emphasizes the importance of clarity regarding the beneficiaries of the Trust and the allocation of shares. It discusses the applicability of section 164 of the Act in cases where the beneficiaries are not explicitly defined. The judgment concludes that the Trust did not allocate funds appropriately for its stated objectives, leading to the imposition of the maximum marginal rate of tax by the Assessing Officer. Issue 3: Genuineness of contributions received by the Trust The judgment addresses the genuineness of the contributions received by the Trust and doubts raised by the Assessing Officer regarding the purpose of the Trust. It questions whether the idols specified in the Trust Deed were actual beneficiaries given the absence of installations and ceremonies. The judgment explores the discrepancy between the stated objectives of the Trust and the actual utilization of funds. It highlights the lack of evidence supporting the genuine nature of the donations and the purported beneficiaries. The judgment ultimately concludes that the Trust was not genuine and operated for tax evasion purposes, leading to the inclusion of alleged donations as income of the assessee. In conclusion, the judgment rules in favor of the revenue assessees, highlighting the lack of genuineness in the Trust's operations and the improper allocation of funds, resulting in the imposition of tax liabilities at the maximum marginal rate.
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