NARESH SENGUPTA FOUNDATION Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This reference under Section 256(1) of the Income-tax Act, 1961, relates to the assessment years 1980-81 and 1982-83.

(2.) Shortly stated, the facts are that the assessee, Naresh Sengupta Foundation, has been assessed by the Income-tax Officer in the status of an association of persons for the assessment years 1980-81 and 1982-83. It was created by a deed of trust dated December 26, 1979. The trustees of the trust, according to the said deed, were Sri Naresh Chandra Sengupta as chairman, his wife, Smt. Shefali Sengupta, and two others, viz., Sri Biswanath Chakraborty and Smt. Arati Ghosh. It is mentioned in the deed that, in the case of death of the donor-founder who is also chairman-trustee, his seniormost descendant shall become one of the trustees in his place and similarly after the death of any such descendant, the latter's seniormost heir shall become one of the trustees. Thus, the office of the trusteeship shall be hereditary. It is further mentioned that the seniormost heir of the family of the donor-founder's descendants irrespective of whether male or female shall always become one of the trustees according to the rule of primogeniture. Similarly, in the case of death of Smt. Shefali Sengupta, wife of the donor-founder, her second eldest heir shall become a trustee in her place and as such the said trusteeship shall also be hereditary according to the rule of primogeniture in the second line of heirs. The beneficiaries of the trust are as under :

(3.) It is also a relevant fact that there is one Bharati Welfare Society in which the donor-founder, Shri Naresh Chandra Sengupta, is said to be interested as a social worker. He is said to have taken the initiative for the formation of the said society for spreading education amongst boys and girls. The said society has been registered under the Societies Registration Act. However, it is specifically mentioned in the deed of trust that the said society has no connection with and interest in the properties of the assessee-trust. The assessee-trust leased out its property to the said society and as such it has rental income. The assessee-trust made some donation to the said society.