BHARTI TRUST Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Ahmedabad Bench "c" has referred the following two questions under Section 256 (1) of the Income-tax Act, 1961 at the instance of the assessee:

(2.) FOR the reasons that follow hereinafter, the reference is returned unanswered and hence, bare minimum facts are recorded.

(3.) THE Assessing Officer invoked provisions of Section 161 (1a) of the Act for Assessment Years 1985-86 and 1986-87 holding that the assessee, a private trust, is carrying on business as a partner. The assessee contended that Section 161 (1a) of the Act cannot be invoked because the assessee has shown partnership share income from the firm at NIL on the ground that the accounts have not been received from the partnership. The Assessing Officer has not accepted this contention by holding that unless and until the Trust ceases to be a partner or the firm discontinues the business, the entire income of the Trust has to be taxed as per the maximum marginal rate.