Determinate trust treatment excludes section 164(1) where beneficiaries are identified and their shares are specified.

A trust with identified beneficiaries and specified shares was treated as a determinate trust, not a discretionary trust, because the trust deed fixed the beneficiaries and their entitlements. The trust income for the relevant year was distributed to three beneficiaries, who included their respective shares in their individual returns and paid tax accordingly. In the absence of material showing discretionary character, section 164(1) of the Income-tax Act, 1961 was held not to apply to the trust income, and the issue was decided against the Department.

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Issues: Whether the assessee-trust was a discretionary trust and whether section 164(1) of the Income-tax Act, 1961 applied to its income.

Analysis: The trust deed provided for beneficiaries whose identities were known and whose shares were specified. The trust income for the relevant assessment year had been distributed to three beneficiaries, and they had included their respective shares in their individual returns and paid tax thereon. In the absence of material showing that the trust was discretionary, and in view of the determinate nature of the beneficiaries' shares, section 164(1) was not attracted.

Conclusion: The trust was not a discretionary trust and section 164(1) of the Income-tax Act, 1961 did not apply; the question was answered in the affirmative and against the Department.

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