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TMI Blog1996 (6) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... ot in consonance with the decision rendered by this court in the case of CIT v. Deepak Family Trust No. 1 [1995] 211 ITR 575 and by the Calcutta High Court in the case of CIT v. Shri Krishna Bandar Trust [1993] 201 ITR 989. In all these petitions, there is a common point and at the request of the learned advocates, we have disposed of these matters by a common judgment. We have taken the facts from Special Civil Application No. 829 of 1996, which are as under : The petitioner-assessee is a private discretionary trust. The beneficiaries of the said trust are individuals. For the assessment year 1993-94, the assessee submitted its return in the status of an individual, disclosing therein the long-term capital gain. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgeable under the head ' Capital gains ' the tax payable by the assessee on the total income shall be the aggregate of,--- (a) in the case of an individual or a Hindu undivided family,--- (i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been his total income ; and (ii) the amount of income-tax calculated on such long-term capital gains at the rate of twenty per cent. : Provided that where the total income as reduced by such long-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses. According to Mr. Shelat, the assessee would fall in the category of an association of persons and, therefore, clause (c) of sub-section (1) of section 112 will be attracted. Mr. Shah, learned counsel for the assessee, submitted that a discretionary trust must be considered to be an individual for all purposes. Mr. Shah drew our attention to the following portion of the decision of the case in the case of CIT v. Deepak Family Trust No. 1 [1995] 211 ITR 575 (Guj) (headnote) : " It is now well-settled that the word ' individual ' does not necessarily and invariably always refer to a single natural person. A group of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the trustees of a discretionary trust can be taken to be as " association of persons " or as " individual ". The Assessing Officer has first to, ascertain before proceeding with the assessment whether the person filing a return would fall in which category of persons as defined in section 2(31) of the Act, meaning thereby the Assessing Officer is required to determine the status of a person and that would be the first step to be taken for assessment proceedings. After determining the status of a person as an individual or an association of persons, as the case may be, he will have to proceed further and will have to determine the liability of the assessee. For considering whether it would be an association of persons or an individual, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be noticed that for individuals and Hindu undivided families, the amount of income-tax on long-term capital gain is to be calculated at the rate of 20 per cent. However, a provision is made with respect to a company, another category of assessee, at the rate of 40 per cent. and other than individual or a Hindu undivided family and company, all other cases are covered under clause (c) of sub-section (1) of section 112 and the person falling in this category is to be charged on long-term capital gain at the rate of 30 per cent. But once the status of an assessee is determined as an individual, then in that case clause (a) of sub-section (1) of section 112 will be made applicable. The Assessing Officer, without making a reference to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of his submission, he has relied upon the decision of the apex court in the case of East India Commercial Co. Ltd v. Collector of Customs, AIR 1962 SC 1893, wherein the apex court has held as under (page 1905) : "We, therefore, hold that the law declared by the highest court in the State is binding on authorities or Tribunals under its superintendence, and that they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding. If that be so, the notice issued by the authority signifying the launching of proceedings contrary to the law laid down by the High Court would be invalid and the proceedings themselves would be without jurisdiction." In the result, the petitions are allowed. The imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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