COMMISSIONER OF INCOME-TAX Vs. GURMAIL KAUR TRUST

JUDGEMENT

(1.) THIS order will dispose of three Income -tax References Nos. 47 to 49 of the 1989. Income -tax References Nos. 47 and 48, relate to Smt. Gurmail Kaur Trust, Ludhiana, for the assessment year 1982 -83 and 1983 -84, whereas Income -tax Reference No. 49 relates to Smt. Kartar Kaur Trust for the assessment year 1981 -82. The Income -tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short 'the Tribunal'), vide its common order dated April 25, 1988, has allowed the applications filed by the Revenue under Section 256(1) of the Income -tax Act, 1961 (for short 'the Act'), and has referred the following question of law in all the three cases for the opinion of this court: 'Whether, on the facts and in the circumstances of the case, the Income -tax Appellate Tribunal is right in law in holding that there is no legal infirmity in so far as this trust is concerned and that it could not be treated as a discretionary one to be assessed as per the provisions of Section 164 of the Income -tax Act, 1961 ?'

(2.) KARTAR Kaur Trust (Regd.) was created by a deed dated February 24, 1973, for which the lady bequeathed her savings for the benefit of the children of three sons of her husband's other wife, Gurmail Kaur. The children were to take per stirpes, i.e., children of each son to be entitled to one -third share equally. Initially, there were in all 11 beneficiariesthree children of one son, five children of another son and three children of the third son to whom the income was distributed according to the above arrangement as stipulated in the trust deed.

(3.) PURSUANT to the order of the Commissioner, fresh assessment for the assessment year 1981 -82 was framed by the Income -tax Officer on September 27, 1983, by holding that the share of the beneficiaries being indeterminate, the income of the trust was liable to be taxed in its hands at the maximum marginal rate as provided in Section 164(1) of the Act. The assessee preferred an appeal before the Appellate Assistant Commissioner of Income -tax, Ludhiana, who allowed the same holding that since the original trust deed was valid, the shares as defined therein were also valid. Accordingly, it was held that the shares of the beneficiaries being defined and determinate, the provisions of Section 164(1) of the Act were not attracted.