Law:

Section:

Section 164 of the Income-tax Act, 1961 - Trust/Trustees - Charge of tax where shares of beneficiaries unknown -Assessment years 1989-90 to 1999-2000 - Whether section 164 gets attracted only when shares of beneficiaries are unknown - Held, yes - Assessee-trust was created for benefit of seven beneficiaries - Trust deed provided, inter alia, that 10 per cent of income of trust should be distributed to beneficiaries of trust and balance 90 per cent should be accumulated in corpus fund - Trust deed clearly prescribed beneficiaries and shares they were entitled to and also prescribed other terms relevant to share of interest in corpus on determination or termination of trust - For relevant assessment years, beneficiaries of assessee-trust had filed their returns of income admitting 10 per cent income distributed to them - Assessing Officer, however, treated trustees of assessee-trust as representative assessees in respect of 90 per cent of accumulated income and, accordingly, framed assessments under section 164 - Whether, on facts, it was clear that beneficiaries of assessee-trust and their shares were determinate and, therefore, trustees could not be assessed to tax and provisions of section 164 were not attracted - Held, yes FACTS The assessee-trust was created by a trust deed dated 1-4-1986 for the benefit of five beneficiaries and the respective share of each beneficiary was in different percentage. From 1-4-1989 onwards, the beneficiaries were seven in number and their share in the income was equal. As per trust deed, the shares in respect of 6th and 7th beneficiaries, who were unmarried at that time, were equal in the status of an individual till the date of their marriage and separately in the status of the individual and HUF consisting of themselves and their respective wives from the date of marriage. The trust deed clearly provided that when the said beneficiaries would be married, their spouses would automatically become beneficiaries along with the other continuing beneficiaries in the said accounting year and subsequent accounting years and would equally divide the beneficial interest of income among the aforesaid beneficiaries; and that as and when…

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