ANASUYA MUTHANNA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Tribunal referred the following three questions for the opinion of this Court under s. 256(1) of the IT Act, 1961 :

(2.) THE assessee is assessed in a representative capacity as trustee of Abirami Trust. THE trust was created under a deed of settlement dt. 25th March, 1973, by the grandfather, Sri M. A. Chidambaram, in favour of his granddaughters, represented by their parents Sri A. C. Muthiah, and his wife, Smt. Devaki Muthiah. For the asst. yr. 1974-75, the assessee claimed that the trust was assessable to tax at the normal rate. During the assessment year under consideration, there was only one beneficiary. THErefore, the beneficiary is known and the shares of the beneficiary are determinate. Hence, tax at the normal rate was required to be levied. THE ITO considering the settlement deed dt. 25th March, 1973, held that the beneficiary is not known and the share of the beneficiary is indeterminate and accordingly he applied the provisions of s. 164(1) of the IT Act, 1961, and the trust income was taxed at the maximum rate applicable. Aggrieved, the assessee filed an appeal before the AAC. THE AAC confirmed to order passed by the ITO. Aggrieved, the assessee filed a second appeal before the Tribunal. Relying upon the decision of the Supreme Court in CWT vs. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust (supra) , contended that on the basis of the principle laid down in the abovesaid decision, the beneficiary is known and the shares of the beneficiaries are determinate, and therefore, the Department was not correct in levying tax at the maximum rate. THE Tribunal, after going through the clauses contained in the settlement deed, held that the beneficiary is not known and the share is also indeterminate, and therefore, the Tribunal held that the authorities below were correct in applying the maximum rate of tax.

(3.) ACCORDINGLY, we answer the question referred to us in the affirmative and against the assessee. No costs.