9911796707
TMI Blog1987 (7) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... authorised to carry on business by the settlor for the benefit of the beneficiaries, the profits were earned on behalf of the persons who had a common interest created under the trust deed and, therefore, they were on that account an AOP. The contention of the Representative of the assessee that the beneficiaries should be independently assessed on their separate share income was rejected by the ITO who took the status of the assessee as AOP and proceeded to tax the trust in that status accordingly, The matter went in appeal before the CIT(A) who confirmed the order of the ITO. The CIT(A) held that the decisions in the case of N.V. Shanmugham and Co. vs. CIT and CIT vs. Indira Balakrishna by the Supreme Court were clearly applicable to the facts of the case. The CIT(A) took note of the fact that out of the 12 beneficiaries at least five were majors. These five beneficiaries were capable of entering into any transaction themselves. He further held that the creation of the trust by the settlor in favour of at least five majors clearly showed that the settlor very well know that the trustees of the trust were going to act for and on behalf of at least five major beneficiaries. He, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Trust Funds (hereinafter called "the said 'M's share') as share of the said Smt. M.S.S.; 3.07 3 per cent (three per cent) of the said Trust Funds (hereinafter called the said "N's share") as share of the said Kumari N.S.S.; 3.08 3 per cent (three per cent) of the said Trust Funds (hereinafter called the said "M's share") as share of the said Kumary M.S.S.; 3.09 6. 50 per cent (six point fifty per cent) of the said Trust Funds (hereinafter called the said "B's share") as share of the said Smt. B.R.S.; 3.10 3 per cent (three per cent) of the said Trust Funds (hereinafter called the said "A's share") as the share of the said Kumari A.R.S.; 3.11 3 per cent (three per cent) of the said Trust Funds (hereinafter called the said "S's share") as share of the said Kumari S.R.S.; 3.12 50 per cent (fifty per cent) of the said Trust Funds (hereinafter called the said "P's share") as share of the said Miss P.M." The following persons were appointed as trustees: "1. Shri R.C.S., 2. Shri J.C.S., 3. Shri S.C.S., 4. Shri R.R.S., 5. Shri A.M.P." The trustees were given wide powers to invest the trust funds as they may deem fit as per cl. 7 of the deed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision was given by the Kerala High Court in the case of CIT vs. S.V. Kumarswamy Reddiar Trust (1982) 26 CTR (Ker) 443 : (1982) 138 ITR 808 (Ker). In that case, a firm comprising of four partners agreed to constitute a trust in favour of nine persons. It empowered the trustees to acquire and carry on business. On the day on which the trust was constituted, the business of the firm was sold to the trust. Even on these facts, the Kerala High Court held that the business was a part of the trust and that income from it was assessable under s. 161(1). This finding was based on the promise that the trust was not created by or on behalf of the minors. Shri Parikh has also cited another decision of the Rajasthan High Court in CIT vs. Duduwala and Co. (1986) 53 CTR (Raj) 327 : (1986) 160 ITR 170 (Raj) where the High Court held that the liability of a representative assessee under s. 161(1) is a vicarious liability and co-extensive with the liability of the person represented by him. The Gauhati High Court in the case of CIT vs. Gangadhar Sikaria Family Trust reported in (1982) 30 CTR (Gau) 117 : (1983) 142 ITR 677 (Gau) gave a similar finding. In that case, the trust was created by Karta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abad Bench of the Tribunal in Kashiba Family Trust vs. ITO reported in (1986) 24 TTJ (Ahd) 460: (1986) 15 ITD 383 (Ahd). 6. Shri Parikh then argued the assessments of some of the beneficiaries had already taken place. He filed copies of the assessment orders and demand notices in the case of ten of the beneficiaries. He cited several decisions in support of the proposition that once an assessment of a partner of a firm or member of an AOP has been made by taxing directly his proportionate share from the firm or association, the ITO is precluded from assessing the firm or AOP directly. This was the essence of the judgment given by the Bombay High Court in CIT, Bombay City VII vs. V.H. Sheth Ors. Several other High Courts have given decisions to the same effect. 7. The learned Departmental Representative relied on the order of the CIT(A). He argued that the business was carried on by a BOI consisting of the 12 beneficiaries, five of whom were majors and were appointed under the trust as trustees and empowered to carry on such business. 8. We have carefully considered the submissions made on either side. The authorities below have not given a finding that the trust is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
