RANGA RAO LOTTERY AGENCIES Vs. CIT

JUDGEMENT

(1.) IN all these cases, the Tribunal, at the instance of the assessee, has stated a case and referred the following common questions of law for consideration by this court : '1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the applicant trust is a discretionary trust and hence maximum marginal rate of tax has to be applied ?

(2.) WHETHER , on the facts and in the circumstances of the case, the Tribunal was right in holding that rectification deed effected by the authority would not relate back and could not cure the alleged defect in the trust deed ?

(3.) WHETHER the Tribunal is further right in law in distinguishing the decisions relied in support of the above proposition ?' 2. The assessment years involved are 1983 -84, 1984 -85 and 1985 -86 (Tax Case Nos. 5, 6 and 7 of 2001) and 1986 -87 and 1987 -88 (Tax Case Nos. 41 and 79 of 1999). There is not much dispute of the facts and the assessee is a trust and the trust was created for the benefit of the beneficiaries whose names are given in the deed of trust. In the original deed of trust dated 10 -3 -1982, the names of the beneficiaries are given but there is no specification of their shares either in the income or the corpus of the trust. A deed of rectification came to be executed by a deed dated 6 -6 -1988, wherein the lacuna, i.e., omission to mention the share of each beneficiary in the income and corpus of the trust was sought to be rectified specifying their share in the income as well as their share in the corpus. The deed of rectification, as already stated, came to be executed on 6 -6 -1988 stating that the settlor never intended the trust to be a discretionary trust and has always intended that the share of each beneficiary is specific both as regards the corpus and the income of the trust. We are concerned with the assessment years prior to the date of execution of deed of rectification dated 6 -6 -1988. The question that arises is whether the trust is a discretionary trust or a specific trust. The assessing officer held that the trust deed is silent in regard to the sharing of income by the beneficiaries and held that it is a discretionary trust. The Deputy Commissioner (Appeals) on appeal preferred by the assessee allowed the appeal of the assessee holding that the shares of the beneficiaries are determinate and the trust is not a discretionary trust. The revenue carried the matter in appeal before the Tribunal. The Tribunal considered the matter and found that the shares of the beneficiaries are not expressly stated in the deed of settlement and were also not ascertainable on the date of execution of the deed of settlement.