COMMISSIONER OF INCOME TAX Vs. PARTHAS TRUST

JUDGEMENT

(1.) WE would first deal with IT Ref. Nos. 84 to 86 of 1979. The question referred to this Court in IT Ref. No. 125 of 1979 being identical to the one in IT Ref. Nos. 84 to 86 of 1979, we would answer the questions referred in IT Ref. No. 125 of 1979 in the light of the conclusions reached in IT Ref. Nos. 84 to 86 of 1979. The important question referred to this Court in IT Ref. Nos. 71 to 77 of 1981 is also identical to the one in IT Ref. Nos. 84 to 86 of 1979, and applying the conclusions reached in IT Ref. Nos. 84 to 86 of 1979, we would answer the questions referred in IT Ref. Nos. 71 to 77 of 1981. The Tribunal, Cochin Bench, at the instance of the Revenue, has drawn up a statement of the case and referred the following question in IT Ref. Nos. 84 to 86 of 1979 to this Court under S. 256(1) of the IT Act, 1961 :

(2.) THE short facts, relevant for the purpose of the case, could be stated as follows: The assessee, the Parthas Trust, Kottayam, is a private trust, of which the author (hereinafter referred to as "the founder") is Smt. Ramachandru Ammal, the widow of Lakshmana Reddiar, the founder of the two business houses known as " Parthas Textiles, Kottayam " and "Parthas Textiles, Attingal ". The firm which conducted the business at Kottayam and in its branches, had 7 partners, all of them being the sons of the said Lakshmana Reddiar (now deceased), and the firm which conducted the business at Attingal had six partners, three of them being his sons, two being his daughters in law and one being his brother in law. The two firms together had 10 persons as partners, the three sons of Lakshmana Reddiar being common partners in the said firms. There are two partners admitted to the benefits of the partnership in the Kottayam firm; and one among them (Sivakumar) is a partner in the Attingal firm also. There are altogether 28 beneficiaries of the trust; and they included the partners of the two firms mentioned above, and other relatives like the grandchildren, nephews, nieces and daughters in law of the late Lakshmana Reddiar.

(3.) IN rejecting the assessee's claim to have the assessment under S. 161 r/w S. 160(1)(iv), the ITO gave three reasons :