Law: Income Tax Act, 1961

Section: 164,166

(a) Income-tax----Representative assessee---Trust---Discretionary trust---Option to assess trust or beneficiary directly---Indian Income Tax Act, 1961, Ss. 164 & 166. (b) Income-tax--- ----Special deduction---New industrial undertaking---Trust---Discretionary trust- --Dividend received by trust from new industrial undertaking---Whether beneficiary entitled to deduction---Matter remanded to High Court---Indian Income Tax Act, 1961, Ss.80-K & 166. Distributions received by a beneficiary from a discretionary trust can be assessed in the hands of the beneficiary or in the hands of the trust. CIT v. Kamalini Khatau (1994) 209 ITR 101 (SC) fol. [Since the High Court had held in favour of the assessee on the first question and, had, therefore, not answered the second question, the Supreme Court remanded the matter to the High Court to decide the second question, i.e., whether, in respect of distributions received by the beneficiary from dividends received by the trust which were exempt under section 80-K of the Income Tax Act, 1961, the beneficiary was entitled to exemption.] ORDER Both these appeals are preferred by the Revenue against the judgment and order of the Gujarat High Court. The questions referred in both these appeals are identical. They read as follows: "(1) Whether, on the facts and in the circumstances of` the case the Income-tax Appellate Tribunal was right in law in holding that the distributions received by the assessee from various discretionary trusts were assessable only in the hands of the trustees of the respective trusts under section 164 of the Income Tax Act,…

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