9911796707
TMI Blog2017 (11) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... rginal rate of tax (at 30%) on the trust in spite all the conditions of section 161(1) of the Income Tax Act 1961 are fulfilled and the trust should be taxed as status of individual. 3. That the Ld. CIT (A) has erred in not observing the fact that the maximum marginal rate of Tax was applied that the maximum marginal rate of Tax was applied to the assessee by the Ld. ITO by passing order u/s 143(1) without giving reasonable opportunity of being heard to the assessee and charging tax at the maximum marginal rates of taxes. 4. That the appellant is a beneficiary trust and is Master Shrestha Kajaria is the sole beneficiary of the trust and creation of the trust was for the sole benefit of Master Shrestha Kajaria. The share of Shrestha Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocessed by the AO under section 143(1) and vide an intimation dated 30.08.2013, the status of the assessee was taken as AOP and tax was charged at maximum marginal rate being 30%. Against the intimation issued by the AO under section 143(1), an appeal was preferred by the assessee before the Ld. CIT (A). During the course of appellate proceedings before the Ld. CIT (A), it was submitted on behalf of the assessee that the trust was constituted by the settler by an indenture on 14.10.2006. The sole beneficiary specified in first para of the indenture was one Master Shrestha Kajaria who was aged 10 months at the time of constitution of the trust. The entire trust property and the income arising there from was to go to the beneficiary Master S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 143(1) taking the status of the assessee as AOP for the following reasons given in paragraph no 5 of his impugned order: "In the decision of the Calcutta High Court, there was no reference made to either the provision of the Transfer of Property Act or the decisions of the Madras High Court mentioned above, but the case was decided simply on the terms of the provisions of section 164 read with the Explanation thereto. In the Gujarat High Court case, it is submitted, with respect that the Court was carried away by the simple terms of the section which was strictly applied and the court did not notice that the section did not cover cases of the beneficiaries who had no right to the income of the trust. The only weak link appears to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was married subsequently and so the beneficiary was found to be known and certain. Thus to conclude that the shares are indeterminate, uncertain and the same are on future date. The beneficiary is a minor. The beneficiary is entitled to the whole of income as well as corpses only on attaining majority and not on earlier date. It is also a relevant fact that the beneficiary is minor during the relevant financial year. Therefore first limb of section 164(1) is applicable since this is a case of a trust where there is sole beneficiary. Therefore, the AO has rightly assessed the case at the status of AOP and the basic exemption has been rightly denied." 4. For the above conclusion, the Ld. CIT (A) derived support from the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se laws which are distinguishable on fact. He has submitted that in the case of Anasuya Muthanna vs CIT (supra) relied upon by the Ld. CIT (A), discretion was given to the trustees till the beneficiary had not attained majority while no such discretion was given to the trustees in the assessee's case. As regards the decision of the Hon'ble Supreme Court in the case of A.V. Reddy Trust & Ors. Vs CWT (supra) relied upon by the Ld. CIT (A), he has submitted that the same was rendered for A.Y. 1976-77 that is before the amendment made in section 161 and 164 by the Finance Act (2) 1980. He has contended that the decision of Hon'ble Kolkata High Court in the case of CIT vs Shree Krishna Bandar Trust 201 ITR 989 and that of Gujarat High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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