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TMI Blog1981 (8) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... st No. 11. The said of the trust disposed of a part of its share investment. As a consequence it realised long term capital gains of Rs. 2,22,422 and short term capital gains of Rs. 1,640. The assessee contended that the capital gains realised by the trustees was not exigible to tax in his hands as a beneficiary. This contention was sought to be supported by placing reliance on the decision of the Bombay High Court in case of CIT, Bombay City-1 vs. J.B. Wadia (1963) 48 ITR 135 (Bom) and in R.H. Pandit v. CIT (1972) 83 ITR 136 (Bom). The ITO rejected the contention of the assessee by stating that the assessee was a beneficiary for life. Secondly the trust deed did not specify the period during which the said trust would remain in force. Thir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court reported at (1968) 68 ITR 503 (SC). In that case, inclusion of income from capital gains in the hands of the assessee by applying provisions of s. 64 of the Act was upheld. On the analogy of the said decision, the ld. Deptl. Rep. argued firstly that in the instant case trustees and beneficiaries were one and the same persons and, therefore, what was realised by the trustees could be said to have been realised by the beneficiaries. Secondly the concept of income under the IT Act was wide enough to take in its sweep realisations by way of capital gains. Shri Patil, on the other hand, relying on the order of the CIT(A), submitted that according to cl. 7 of the deed of trust dt. 24th December, 1953 all monies arising from sale tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for those beneficiaries who had been specified in the trust deed, would not mean that accretions to such corpus would, because it might fall under the definition of "income" under the It Act, be virtually an behalf of, or for the benefit of, the present assessee." In light of the above cited decision, if we examine the facts of the case, it is clear that as per cl. 7 of the deed of trust, the realisation on sale of any investments in the trust fund has to be deemed as a part of trust fund. In other words the realisation on investment would form part of the trust corpus and as a consequence the beneficiary would have no right over such realisation. The income from capital gains therefore, if at all, would be exigible to tax in the hand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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