COMMISSIONER OF INCOME TAX Vs. SINIVALI TRUST

JUDGEMENT

(1.) IN these references at the instance of the Revenue under s. 256(1) of the IT Act, 1961 (hereinafter referred to as "the Act"), the following questions have been referred for our opinion for asst. yrs. 1984-85 and 1985-86: "1. Whether the Tribunal is right in law and on facts in directing the AO to charge the tax at normal rate instead of maximum marginal rate? 2.Whether the Tribunal is right in law and on facts in deleting the interest charged under s. 217 of the Act?"

(2.) WE have heard learned counsel for the Revenue Mr. Manish R. Bhatt, in IT Ref. Nos. 67, 74 to 83 and 88 of 1997, Mr. Bharat Naik in IT Ref. Nos. 40, 43 and 44 of 1997, Mrs. Mauna Bhatt in IT Ref. Nos. 32, 36, 37, 38 and 39 of 1997 and Mr. Tanvish U. Bhatt in IT Ref. Nos. 45, 46 and 47 of 1997. Though served, none appears for the respondent-assessees.

(3.) AT the outset, we would like to make it clear that though the Revenue had proposed three questions for reference to this Court under s. 256(1) of the Act, the Tribunal referred only question Nos. 1 and 3 which are set out hereinabove. Question No. 2 which was proposed by the Revenue, but was not referred by the Tribunal, was as under: "2. Whether the Tribunal is right in law and on facts in not appreciating that the assessee's case is of a conduit pipe of trust wherein the ultimate beneficiaries are other than beneficiary mentioned in the settlement deed?" The Tribunal declined to refer to the said question on the ground that the finding by which the Tribunal rejected the Revenue's contention that the trusts were formed as a colourable device was based on proper appreciation of facts and material on record. It appears that the Revenue did not take any steps to have the said proposed question No. 2 referred to this Court under s. 256(2) of the Act. In this view of the matter, we have not permitted the learned counsel for the Revenue to raise any contention based on the plea that the arrangement was a colourable device to avoid tax liability.