COMMISSIONER OF INCOME TAX Vs. SANCHAY ANGANA TRUST

JUDGEMENT

(1.) IN these identical matters, the Revenue has suggested the following questions in paragraph 4 of the respective applications, seeking a direction to call for the statement of case in respect thereof from the Tribunal under S. 256(2) of the IT Act, 1961:

(2.) THE applications which were made under S. 256(1) of the Act by the Revenue before the Tribunal for referring these questions, were rejected on the ground that its order were made following the decision of the Hon'ble Supreme Court and the jurisdictional High Court and, therefore, no referable question of law would arise.

(3.) IN all these matters, the ITO rejected the claim of the assessee to be charged at a normal rate. The AOs treated the assessee -trusts as a discretionary trust and charged maximum marginal rate. The assessees were admittedly beneficiary trusts of the main trust. The first appellate authority held that the ITO was not justified in levying the tax at maximum marginal rate on the assessees and directed to levy tax at normal rate, allowing their appeals. The Tribunal while considering the appeals of the Revenue, took note of the fact that in all the impugned assessments, the beneficiary assessees had been taxed on maximum rate for the shares of income where the principal trust had also been taxed for the same income. The Tribunal noted that the Hon'ble Supreme Court in the case of Jyotendrasinhji vs. S.I. Tripathi & Ors., (1993) 111 CTR (SC) 370 : (1993) 201 ITR 611 (SC) : TC 44R.596, held that the Revenue had an option in the case of a discretionary trust either to make an assessment upon the trustees or to make an assessment upon the beneficiaries and that both the trustees and the beneficiary cannot be simultaneously taxed in respect of the same income. Following the ratio of the said decision, the impugned assessments were set aside. The Tribunal observed that, whether the appeals of the principal trusts are the subject -matter of references or appeal before the first appellate authority or the Tribunal, this decision was applicable in all cases because it was not disputed in all these impugned assessments that the principal trust had already been assessed by the Revenue for the said income. In computing the tax payable by the principal trust for the income received by the beneficiary assessees, the AOs were directed to compute it at the appropriate rates as envisaged in S. 164 of the Act, in view of the decisions of this Court in CIT vs. Maharaja Daljitsinhji Trust, (1993) 113 CTR (Guj) 296 : (1993) 204 ITR 135 (Guj) : TC 44R.730 and CIT vs. Deepak Family Trust (1994) 119 CTR (Guj) 150 : (1995) 211 ITR 575 (Guj) : TC 26R.451, in respect of the status. In Deepak Family Trust (supra) this Court held that the mere fact that the beneficiaries or the trustees, being representative assessees, are more than one, cannot lead to the conclusion that they constitute an AOP. The trustees of a discretionary trust have to be assessed in the status of "individual". Following the said two decisions of this Court, the Tribunal gave a direction to the AO to compute the income received on behalf of the beneficiary assessees at the appropriate rates as envisaged in S. 164 of the Act. It is clear that the Tribunal has rendered its decision following the decision of the Hon'ble Supreme Court in Jyotindrasinjhi (supra) and the two decisions of this High Court, and therefore, no question of law requiring any opinion of this Court arises from the orders of the Tribunal. All these applications are, therefore, rejected. Rule is discharged in each of them with no order as to costs.