9911796707
TMI Blog1989 (1) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... full details as to the purpose of the Trust, the powers of the Trustees, the names of the beneficiaries, etc. etc. The third proviso to cl. 1(A) of the Affidavit reads as under: "Also provided further that the Trustees shall have full and absolute authority by passing a Resolution of the Board of Trustees at any time to determine one and for all the individual shares of the income of the beneficiaries or to any one or more of them to the exclusion of others or other of them, for their, his or her absolute use and benefit with intent to pay the income of the Trust Fund including the Surplus Reserve Fund in such determinate and known shares and in such an event all subsequent distribution of the income of the Trust Fund including the surplus reserve Fund shall be made in accordance with such determinate and known shares allotted to the beneficiaries or to any one or more of them as the case may be AND the terms of the said Resolution shall be deemed to form part of the Trust from the date of the said Resolution and the Trustees shall not have any power thereafter to alter and/or vary the aforesaid resolution." 5. Exercising the power given under the aforesaid proviso the Board of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following manner: "Statement of Total Income . Rs. Business Income : . . Net profits from proprietory business of M/s Pipe Sales Corporation Bombay . 52,384 Other Sources: . . Interest on S.B. A/c., with Canara Bank . 33 . . 52,417 Less: Deductions: . . Professional Fees deductable under s. 80VV . 350 . Total income 52,067 Less: Prior Charges of beneficiaries: . . Miss Sonal Bipin Kothari 50 % 26,034 . Master Amit Bipin Kothari 50 % 25,033 52,067 . Taxable Income Rs. Nil Notes : 1. Tax on Rs. Nil Rs. Nil Less: Advance-tax paid Rs. Nil 140-A Tax payable Rs. Nil 2. The Trust was settled by Smt. Pushpa Prakash Shah on 25th May, 1979 by an oral disposition. Under the powers vested in the Trustees, the Board of Trustees at their meeting held on 28th June, 1980 defined the shares of the beneficiaries in the Trust. The Trust which was as oral discretionary Trust upto 31st March, 1980 is now a definite trust after the exercise of the powers vested in the Trustees as aforesaid. Accordingly, current year's income is distributed amongst the beneficiaries in definite share(s) as per the Resolution of the Board of Trustees dt. 28th June 1980 and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following manner: "I have considered the observations of the ITO and the submissions of the appellant. I am of the opinion that the trust should not be treated as a discretionary trust since the shares of beneficiaries are determinate as per the resolution passed. In result the appeal is allowed." 10. The Revenue, being aggrieved by the aforesaid order of the AAC has come up in appeal before the Tribunal. The learned representative for the Department vehemently argued that since the case was covered by the provisions of s. 164A of the Act, which is brought on statute from 1st April, 1981 and reads as under: "164A. Charge of tax in case of oral trust.--Where a trustee receives or is entitled to receive any income on behalf of or for the benefit of any person under an oral trust, then, notwithstanding anything contained in any other provision of this Act, tax shall be charged on such income at the maximum marginal rate." the AAC ought to have upheld the action of the ITO in charging the income of the assessee at the maximum marginal rate. He also invited our attention to s. 160(1)(iv) of the Act and submitted that the provisions of cl. (iv) have to be read in the context in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under Expln. 1 to s. 160 of the Act. Similar arguments were also advanced by him in respect of the Expln. 1 to s. 164(3) of the Act. He, therefore, urged that we should uphold the order of the AAC under appeal. 12. The learned representative for the Department, in his reply, submitted that even assuming for the sake of argument that we have to treat the Affidavits/Resolution as an instrument in writing for the purposes of determining whether the income of the assessee has to be taxed at the maximum marginal rate, we cannot ignore the fact that originally the assessee-trust was a discretionary trust. This fact could be clearly discernible from the documents already brought on record. Therefore, the assessee's case would still be hit by the provisions of Expln. (1) to s. 164(3) of the Act. 13. We have carefully considered the rival submissions of the parties and we find considerable force in the submissions made on behalf of the assessee. Sec. 164A provides for charge of tax in the case of oral trust. By Explanation below this section, "oral trust" is defined to have the meaning assigned to it in Expln. 2 below sub-s. (1) of s. 160. The Explanation defines an "oral trust" to me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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