Law:

Section:

Section 164 of the income-tax act, 1961-Representative assessee-Charge of tax where share of beneficiaries unknown-whether deed of rectification executed after close of accounting year so as to make share of beneficiaries in assessee-trust determinate, could be invoked for period earlier to its execution-held, on facts, no-whether where there are only two beneficiaries, their shares must invariably be treated as equal and hence determinate-held, on facts, no Facts A mother and her minor son were the beneficiaries of the assessee-trust. Their shares in the trust were indeterminate as per the original trust deed but were made determinate by a rectification deed dated 8-4-1975. For the assessment year 1975-76, relevant for the account year ending 31-3-1975, the ITO ignored the rectification deed and treated the assessee as a discretionary trust in which the shares of the beneficiaries were indeterminable. The AAC and the Tribunal upheld the ITO's order. The Tribunal also rejected the assessee's contention that as there were only two beneficiaries, their shares should be deemed to be equal. On reference : Held 1. The rectification deed in question was executed on 8-4-1975, i.e., after the expiry of accounting year relevant to the assessment year 1975-76. The assessee was unable to show how the rectification could have any retrospective effect. The trust had already been executed in regard to the assessment years in question before the execution of the rectification deed. The Tribunal was, therefore, right in holding that the rectification deed could not be invoked for the period falling before its execution. 2. The question as to whether the requirements of the two beneficiaries would be unequal was really a question of fact. The original trust deed provided that the credit balance in favour of the beneficiaries would be utilized for their benefit jointly or severally as required by the first beneficiary (mother), for the education of the second beneficiary (son) and incidental expenses, and for other purposes as deemed most beneficial by the trustees for the beneficiaries. The trustees were also empowered to advance loans to the second beneficiary for his…

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