2015 (9) TMI 856 - SCH - Income Tax

Supreme Court upholds Income Tax Act amendment removing deeming provision for trusts

The Supreme Court dismissed the Civil Appeals challenging the amendment in Section 164(1) of the Income-Tax Act, 1961. The Court upheld the removal of the ... Assessment of trust - Charge of tax where share of beneficiaries unknown - Held that:- Having regard to the amendment in Section 164(1) of the Income-Tax Act, 1961 by Finance (No. 2) Act, 1980 which has done away with the deeming provision whereby a trust under Section 164(1) of the 1961 Act could be assessed as though it was association of persons, the view taken by the High Court in the impugned order [2004 (9) TMI 92 - DELHI High Court] cannot be said to suffer from any legal flaw. The view that has been taken in the impugned order is in line with the decisions of High Courts of Calcutta, Gujarat and Madras in 'Commissioner of Income Tax vs. Shri Krishna Bandar Trust' (1992 (3) TMI 23 - CALCUTTA High Court), Commissioner of Income Tax vs. Deepak Family Trust No. 1 and others (1993 (12) TMI 20 - GUJARAT High Court) and Commissioner of Income Tax vs. Venu Suresh Sanjay Trust and others (1995 (12) TMI 18 - MADRAS High Court) respectively. The Supreme Court dismissed the Civil Appeals regarding the amendment in Section 164(1) of the Income-Tax Act, 1961, which removed the deeming provision for trusts to be assessed as associations of persons. The Court held that the view taken in the impugned order aligns with previous decisions and hence, the appeals were dismissed with no costs.