9911796707
TMI Blog1989 (5) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... The ITO as well as the Dy. CIT(A) have taken the view that the trust is a discretionary trust and it should be taxed on maximum marginal rates. The main reason given by the authorities below is that Shri Shanti Kumar Chordia was not married on 1st March, 1983, therefore, his wife Smt. Nayantara Chordia was married only on 20th Jan., 1984, i.e., after execution of the Trust Deed. Further the son was born on 16th Sept., 1985 i.e. after the end of the previous year. Therefore, the parties were not known nor exist. The Trust was discretionary and liable to be assessed for maximum marginal rates. Dy. CIT(A) specially relied on the Expln. 1 to s. 164. 2. Being aggrieved assessee came in appeal before us. Learned counsel for the assessee Shri R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 16th Sept., 1985. Trust Deed provided that Shri Shanti Kumar will be the beneficiary of 10 per cent share income, wife of Shri Shanti Kumar will be the beneficiary of 60 per cent share income and their eldest child will be the beneficiary of 30 per cent share income. Therefore, so far the beneficiaries are concerned, there is no discretion to the trustees. Now the question remains what will happen if Shri Shanti Kumar does not marry or after his marriage his wife dies or son may born or may not born. Dy. CIT(A) has pointed out so many such type of possibilities. In my view they are not very relevant. The relevant is whether trustees have any discretion regarding distribution of the profits or the income of the trust. Clause 2(b)(1), 2(b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid 10 years, as the case may be, and the Trust Fund and the balance of the accumulated income shall be distributed amongst heirs of the said Shri Shanti Kumar Chordia excluding the Settler in equal shares". Therefore, considering this aspect, I do not think that on the basis of these facts this trust can be said to be a discretionary trust. 3. Now whether on the basis that Shri Shanti Kumar was not married or the child was not born during the previous year, can it be said to be a discretionary trust. The issue was considered by their Lordships of the Allahabad High Court in the case of Ram Krishna Gupta and held that it is well settled that a trustee may enter into a partnership on behalf of the trust and it is all well settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are apparent and provided no discretion to the Trustees. Therefore, in my view Dy. CIT(A) has gone wrong in holding that trust is not specific. Considering the facts stated above and the law relied on by Shri Ranka, I hold that the trust is specific and the share-income should be assessed in the hands of respective beneficiaries available or in the instance on the year ending of previous year. In this case the child was not even born in the previous year. His share should be distributed in proportionate amongst the other beneficiaries, namely, Shri Shanti Kumar and his wife. The alternative argument of Shri Ranka was not dealt with by the Dy. CIT(A) therefore, does not arise from the order of the Dy. CIT(A) and I do not feel it necessary t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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