D E ANKLESHARIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following five questions have been referred to this Court by the Tribunal, Ahmedabad under s. 256(1) of the IT Act, 1961:

(2.) THE assessee is a trust. It was created by a deed dt. 1st April, 1937. THE object of the trust is to make good shortfall, if any, in the income of corpus of other trusts which were created by Dr. Anklesharia or which were likely to be created by him in future. In this reference, we are concerned with the asst. yrs. 1971-72 and 1972-73. For the relevant years, the assessee-trust declared in its returns income of Rs. 10,317 and Rs. 16,731. It was contended before the ITO that the trust being a religious and charitable trust, its income was exempt under s. 11(1) of the Act. It was also contended that the assessee-trust had three beneficiaries. THEy were three trusts known as (i) General Charitable Trust; (ii) Religious Rituals Trust and (iii) Mrs. Shirinbai D. Daruwala Children Trust (trust No. 8). However, it was conceded that General Charitable Trust did not provide for minimum annual income and, therefore, it was not a beneficiary under the assessee-trust. As regards trust No. 8, it was contended that the youngest beneficiary under the said trust attained the age of 28 on 25th Feb., 1968 and since then, he has ceased to be a beneficiary under the assessee-trust. Thus, the only beneficiary under the assessee-trust was Religious Rituals Trust and, therefore, the assessee-trust deserved to be regarded as a trust created for charitable and religious purpose. It was also contended that the income of the trust should not be taxed at 65% as s. 164(2) was attracted in this case. THE ITO found that the object of the Trust was not charitable or religious; that the income for two years was not spent for any charitable or religious purpose and that shares of individuals who were beneficiaries under the trust were unknown or indeterminate. He, therefore, computed the tax at the rate of 65%. THE assessee preferred two separate appeals to the AAC but the same were dismissed. THE assessee then approached the Tribunal which also dismissed the appeals filed by the assessee. THE assessee, therefore, preferred an application under s. 256(1) to the Tribunal for referring the abovestated questions to this Court. THE Tribunal being satisfied that the said questions did arise out of its order, has referred the same to this Court.

(3.) FOR the reasons stated above, we answer questions Nos. 1 to 4 in the affirmative, that is, against the assessee and in favour of the Revenue. We answer the question No. 5 by stating that the assessee-trust did fall within the purview of s. 164 of the Act. Reference is disposed of accordingly. No order as to costs.