1997 (10) TMI 22

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..... y the Commissioner of Income-tax under section 263 of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that because the beneficiary was non-existent at the time of the execution of the trust deed, it could not be said that the beneficiary was known and that the provisions of section 164(1) would not therefore be applicable ?" The four assessees who are the respondents in the tax cases are four trusts. Of the four trusts two trusts were created for the benefit of the would be son-in-law of the settlor and other two trusts for the benefit of the would be daughter-in-law. The terms of the trust deeds in all the cases are similar. Hence, we noticed one of t .....

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..... determinate and unknown at the end of the previous years and directed the Income-tax Officer to assess the assessees, at the maximum rates. The assessees appealed to the Tribunal challenging the order of the Commissioner of Income-tax. The Appellate Tribunal, following an earlier order in the case of Smt. Umrao Kavur Bai, Madras (I. T. A. Nos. 1523 to 1526 (Mad) of 1977-78, dated August 22, 1978), held that because the person was non-existent at the time of the execution of the trust deed, it cannot be taken that the beneficiary was not known. The Tribunal, therefore, held that since the beneficiaries were known under the relevant terms of the deeds of trust, the provisions of section 164(1) of the Act are not applicable and the order of th .....

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..... o assess the trust at the maximum rate invoking the provisions of section 164(1) of the Act cannot be regarded as correct in the eye of law. Following the earlier decisions of this court cited supra. we hold that there is no infirmity in the order of the Appellate Tribunal in holding that the beneficiaries cannot be regarded as non-existent at the time of the execution of the trust deed and the beneficiaries were known. Therefore, in this view of this matter, the questions of law referred to us in the instant cases are liable to be answered in the affirmative and against the Revenue. Accordingly, we answer both the questions in all the cases referred to us in the affirmative and against the Revenue. There will, however, be no order as to co .....

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