9911796707
TMI Blog2005 (2) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... inal rate of tax has to be applied? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the rectification deed effected by the authority would not relate back and could not cure the alleged defect in the trust deed? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in refusing to follow the general principle of law, viz., when the shares are not specified in the deed, the beneficiaries take the shares in equal proportion? 4. Whether, the Income-tax Appellate Tribunal is further right in law in distinguishing the decisions relied in support of the above proposition?" The assessment years involved are 1983-84, 1984-85 and 1985-86 (fax Case Nos. 5, 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see holding that the shares of the beneficiaries are determinate and the trust is not a discretionary trust. The Revenue carried the matter in appeal before the Income-tax Appellate Tribunal. The Tribunal considered the matter and found that the shares of the beneficiaries are not expressly stated in the deed of settlement and were also not ascertainable on the date of execution of the deed of settlement. The Tribunal, therefore, held that the assessee-trust was a discretionary trust. As far as the rectification deed is concerned, the Tribunal held that the rectification deed came into force subsequent to the assessment years in question and did not relate back to the assessment years. The Tribunal, therefore, held that the trust is a discr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , except mentioning the names of the beneficiaries, the shares of the beneficiaries are not expressly stated and further, it is not possible to ascertain the share of each beneficiary from the reading of the deed of settlement. We, therefore, hold that the Tribunal was correct in holding that the trust is a discretionary trust as under Explanation l(ii) to section 164 of the Act, the shares of the beneficiaries in the income and the corpus are not stated expressly in the deed and it was also not ascertainable on the date of the deed of settlement. Learned counsel for the assessee referred to the deed of rectification dated June 6, 1988. The deed of rectification came to be executed on June 6, 1988, and the deed also came into force only sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maximum marginal rate in the hands of the trust. However, we find that the Tribunal has not considered the question in proper perspective. Though the Tribunal has referred to the decision of the Supreme Court in CIT v. Kamalini Khatau [1994] 209 ITR 101, it did not have the benefit of the svbsequent decision of the Supreme Court in Moti Trust v. CIT [1999] 236 ITR 37. The Tribunal has proceeded on the basis that the income was not actually received by the beneficiaries and it is open to the Revenue to make a direct assessment on the trust. We find the Tribunal did not have the benefit of the decision of the Supreme Court in Moti Trust v. CIT [1999] 236 ITR 37 and hence we are of the view that the question has to be considered by the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X
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