COMMISSIONER OF INCOME TAX Vs. KRISHNA TRUST

JUDGEMENT

(1.) THE following question has been referred to this court at the instance of the Revenue by the Income -tax Appellate Tribunal, under Section 256(1) of the Income -tax Act, 1961, (for short "the Act") ;

(2.) THE matter relates to the income of a trust for the assessment year 1980 -81. The trust was created by a registered document, dated September 1, 1978, by Smt. Gallobai. A sum of Rs. 5,000 was credited as trust fund by using which the trustees would hire and exhibit cinematographic films and make profit. Out of the profit earned, 15 per cent. is to be credited to the charity account to be spent for religious and charitable purposes, such as, setting up of a public dharmashala, or public temple or educational institution, feeding of the poor or to set up an institution for medical relief, etc. The remaining 85 per cent. is to go to the four specified beneficiaries in specified proportion. The Assessing Officer took the view that the beneficiaries of the 15 per cent. of the income credited to the charity account are indeterminate and tax has to be levied under Section 164(1) of the Act The Appellate Assistant Commissioner took the view that tax has to be assessed under Section 164(3) of the Act. The Tribunal, in further appeal by the assessee, held that assessment has to be made under Section 164(5)(a) of the Act. The Revenue contends that the appropriate provision is Section 164(1) of the act. It is necessary to note that the dispute relates only to the 15 per cent. of the trust income credited to the charity account and not to the 85 per cent. paid to the specified beneficiaries.

(3.) SECTION 164 of the Act reads as follows :