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TMI Blog1988 (10) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and eight other groups of persons each having 7 per cent interest. Provisions have been made in the event of the demise of any of the beneficiaries during the subsistence of the trust. It is also declared that the groups of persons which are described in Table 'B' in clause 2(a) in the deed consisting of persons mentioned in the respective bodies of individuals as a group alone are the beneficiaries of the trust. It is also mentioned that none of the individual members of the respective bodies can predicate or claim any separate share in the beneficial interest of the concerned body. The trust would exist up to the date on which the eldest child of Mr. Primus Rasquinha attains the age of majority. Upon the determination of the trust, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the individual beneficiaries, i.e., after determining the share from the trustees he would have to further give deductions and allowances, the beneficiaries may be entitled to under the Income-tax Act and to that net figure so arrived at, the maximum marginal rate should be applied. In support of his contention he had relied on the decision of the Calcutta High Court in the case of A. Razzak v. CIT [1963] 48 ITR 276 and the decision of the Supreme Court in the case of CWT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust [1977] 108 ITR 555. 5. Shri Sethuraman for the department pointed out that when the maximum marginal rate is applicable without any deduction to all the income it is immaterial whether that rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of tax avoidance, the main object being to avoid payment of the registered firm's tax which would become payable if the business is carried on in partnership. 45. In order to counteract such attempts at tax avoidance, it is proposed to make a provision in the Income-tax Act, that where any income in respect of which any person mentioned in clause (iv) of sub-section (1) of section 160 of the Income-tax Act (i.e., a trustee appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise, including a wakf deed) is liable as representative assessee consists of or includes profits and gains of business, income-tax shall be charged on the whole of the income in respect of which such person is so l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociation of persons, etc., in cases where any one of the following conditions is fulfilled, namely : --- (i) none of the beneficiaries has any other income chargeable under the Income-tax Act exceeding the exemption limit or is a beneficiary under any other trust ; (ii) the trust is declared by a person by will and such trust is the only trust so declared by him ; (iii) the trust has been created before 1st March, 1970, by a non testamentary instrument and the Income-tax Officer is satisfied that the trust was created bona fide exclusively for the benefit of the relatives of the settlor is a Hindu undivided family, exclusively for the benefit of the members of such family, in circumstances where such relatives or members were mainly depe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in drafting the section the Legislature's intention is not reflected, or in other words, the section has mis-fired then, of course, the assessee would be entitled to the benefit. 7. On a plain reading of the section we find there is no difficulty at all in holding that the income of the trust in its entirety should be taxed at the maximum marginal rate. It will be noticed that the sub-section is non-obstante to sub-section (1) of sec. 161. This section 161(1) which gives the trustees the right of being assessed to the extent and in the same manner and to the same extent as the beneficiary. But for that section a trustee would naturally be assessed like any other individual or association of persons. There is nothing in income-tax law which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 161(1A) the income has to be apportioned among the beneficiaries. Since in our opinion, it does not have to be apportioned, this case is not relevant. The case of A. Razzak is only stating what later the Supreme Court had stated in Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust's case. We, therefore, do not accept his submissions and uphold the order of the Commissioner (Appeals) on this point. 11. There is one more issue with regard to the computation of income. The assessee trust was running a dairy. There were a number of cows. During the accounting year these cows were disposed of for Rs. 73,900. The assessee's case is that the income on sale of the cows should be excluded. This claim has been rejected by the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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