Law:

Section:

Section 164 of the Income-tax Act, 1961 - Trust - Charge of tax where shares of beneficiaries unknown - Assessment years 1983-84 to 1987-88 - Assessee-trust was created through deed of trust dated 10-3-1982 for benefit of beneficiaries, wherein their names were mentioned but their shares were not specified either in income or corpus of trust - Subsequent to relevant assessment years, a deed of rectification dated 6-6-1988 was executed, wherein shares in income and corpus were specified - Assessing Officer, by holding that assessee-trust was a discretionary trust, charged income at maximum marginal rate of tax - Tribunal held that in deed of trust, shares of beneficiaries were not expressly stated and it was also not possible to ascertain share of each of beneficiaries from reading of deed of settlement dated 10-3-1982 - Tribunal further held that deed of rectification was executed and came into force subsequent to assessment years in question and it did not relate back to deed of settlement and did not cure alleged defect in original deed of settlement - Tribunal, therefore, held that assessee was discretionary trust under Explanation 1(ii) to section 164 - Whether, on facts, Tribunal was justified in doing so - Held, yes FACTS The assessee-trust was created through deed of trust dated 10-3-1982 for the benefit of beneficiaries whose names were given in the said deed but there was no specification of their shares either in the income or in the corpus of the trust. Thereafter, a deed of rectification dated 6-6-1988 was executed specifying their share in income as well their share as in the corpus. For the assessment years 1983-84 to 1987-88, the Assessing Officer assessed the assessee-trust, applying the maximum marginal rate of tax on the ground that the trust deed was silent with regard to the sharing of income by the beneficiaries, hence, it was a discretionary trust. On appeal, the Commissioner (Appeals) allowed the appeal and held that the shares of the beneficiaries were ascertainable and the trust was not a discretionary trust. On further appeal, the Tribunal found that the shares of the beneficiaries were not expressly stated in the deed of trust and…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492