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TMI Blog1985 (5) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... t "loss". There is a subtle distinction between the two in that prejudice can be caused when one sees the over all position and not merely the particular case or particular assessment year. In Tara Devi Agarwal v. Commissioner (1973) 88 ITR 323 (SC) Commissioner's order resulted in a refund in the case in which order was passed but was held to be correct in view of the repercussions elsewhere. Although the issue for the years may be academic at present, Commissioner cannot go wholly by the state of affairs existing at a particular time. As he has to take stock of the overall position, Commissioner is right in assuming jurisdiction. The preliminary objection is rejected. For assessment year 1981-82 at the relevant time, there was positive in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nless it fulfils the conditions of proviso to section 164(1). The relevant portion is as under . . . where the relevant income is receivable by the trustees on behalf of . . any . . . fund created bona fide by a person carrying on a business . . . exclusively for the benefit of persons employed in such business . . . tax shall be charged on the relevant income as if it were the total income of an association of person. 5. Now the assessee is an irrevocable trust settled by Bajaj Auto Ltd. on 27th March, 1976 on five trustees enabling the trustees to spend both the corpus and the income for the declared objective. Clause 5 is as below: "Only such of the persons who shall be in the employment of the company shall be eligible to receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. 7. To provide housing facilities to the employees of the company. 8. To construct, maintain and to hire such buildings as may be required for carrying on the objects. 9. To carry out other welfare objects and purposes which are conducive to or beneficial to the company. Clause 8 gives further discretion to the trustees to contribute to construction of hospital etc. and to hand over the same to any authority or institution which may agree to provide facilities to the employees and their family members. 7. Shri Mehta submitted that prima facie, from the above clauses, the assessee falls under category (iv) of proviso to section 164(1). The Commissioner has however given too narrow a meaning as such to the words of the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as alleged the trust is void being violative of rule against perpetuity it would result, in a resultant trust in favour of the settlor a fact which is relevant here. 9. This brings us to the main question. Shri Mehta explained that according to Commissioner a case can fall under the clause (iv) of the proviso to section 164(1) only if it is marked for the benefit of present employees and for this purpose families of employees and ex-employees are excluded. Ultimately when a benefit is given to the family of the employee it meets the need of the employee whose individual needs cannot be isolated from the collective needs of the family for which the employee has to take full responsibility. No member of the family gets any benefit d'hors t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e family, the trust is really meeting the needs of the employees but clause 5 is so warded as to indicate that members of the family get the benefit directly independently of any application by the employee. This means that the trust is not "exclusive" for the "employees". Shri Walvekar then pointed out the dangerous portents of abuse. The trust can give all the benefits to an individual in concert with the employer by making the individual "employee" just for one day. Accordingly the departmental representative supported the order of Commissioner. 11. In this rejoinder Shri Mehta submitted that clause 5 does not have the meaning attributed to it by the departmental representative. It is really the needs of the employee that are being met ..... X X X X Extracts X X X X X X X X Extracts X X X X
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