Law:

Section:

2008] 296 ITR 129 [2006] 152 TAXMAN 382 (GUJ.) HIGH COURT OF GUJARAT Ganesh Chhababhai Family Trust* v. Commissioner of Income-tax D.A. MEHTA AND MS. N.N DEVANI, JJ. IT REFERENCE NO. 331 OF 1993 AUGUST 2, 2005 Section 160, read with section 164, of the Income-tax Act, 1961 - Trust/ Trustee - Assessment of - Assessment year 1982-83 - Assessee-trust filed a nil return claiming itself to be a written specific trust - Assessing Officer, finding that intention of settlor was to settle property for benefit of her grand children, held that assessee-trust was not a valid trust and sought to make assessment in status of AOP at maximum marginal rate - Before Tribunal, settlor had clearly stated that she had created assessee-trust for benefit of 12 grand children and that 45 trusts had been named as beneficiaries instead of 12 grand children on advice of her advocate - Tribunal held that assessee-trust was not a genuine trust and that assessment of income in question was liable to made in status of AOP - Whether finding of Tribunal that assessee was not a genuine trust did not require to be interfered with - Held, yes - Whether, however, in absence of any finding that grand children had combined in a joint enterprise to produce income, it could not be said that they had status of AOP and, therefore, finding of Tribunal, that assessment of income in question was liable to be made in status of AOP at maximum marginal rate chargeable under section 167A, could not be upheld - Held, yes FACTS The assessee-trust filed a nil return claiming itself as a written specific trust, wherein 45 persons in their capacities as trustees of 45 beneficiary-trusts were beneficiaries. The Assessing Officer called upon the settlor to depose before him. He also examined the two persons who had created 22 and 23 trusts respectively. The Assessing Officer observed that the intention of the settlor was to settle the property for the benefit of the grand children, and all other intermediary entities, namely, 45 trusts and 91 trusts were paper entities and held that the assessee-trust was not a valid trust. Accordingly, the Assessing Officer sought to assess income in status of AOP, at maximum…

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